Mar 25, 2021 - Economy

Fed: Limits on payouts will end for most banks after June 30

Photo of a Wall St sign next to a building that has an American flag hanging on one side

Photo: Angela Weiss/AFP via Getty Images

Temporary limits on dividend payments and stock buybacks are expected to wrap up for most banks after June 30, once annual stress tests are completed, the Federal Reserve announced Thursday.

Why it matters: It's the latest example of pandemic-era restrictions — and breaks on regulatory requirements — getting rolled back as the worst of the economic crisis passes.

What they're saying: "The banking system continues to be a source of strength and returning to our normal framework after this year’s stress test will preserve that strength," Randal Quarles, the Fed’s vice chair of supervision, said in a statement.

Flashback: The Fed initially imposed restrictions on dividend payments and buybacks last summer after a round of tests on how their balance sheets could withstand a series of strenuous economic scenarios.

  • They tweaked those limits at the end of last year following a second set of so-called "stress tests."

Catch up quick: The Fed said last week it would let a break on banks' capital requirements — put in place when the pandemic hit — expire later this month, much to the industry's ire.

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