The Federal Reserve is extending its ban on Wall Street banks of stock buy-back and capping dividends payments through the end of the year. The decision is to “ensure that large banks maintain a high level of capital resilience,” during these economic uncertain times, according to the Fed.
The central bank also put restrictions on 34 banks with over $100 billion in total assets to dish out excessive dividends to investors. Nearly 20 of those banks are American entities like Bank of America, JP Morgan Chase and Citibank. They typically do quarterly share buybacks.
The cap on dividends restricts banks to give more dividends than either the previous year’s returns or the average earnings for the previous four quarters.
The restrictions initially came in quarter three after the Fede...