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Wed Sep 30, 2020, 04:50 PM

Fed extends bank stock buyback ban till year-end

https://seekingalpha.com/news/3618598-fed-extends-bank-stock-buyback-ban-till-year-end?utm_medium=email&utm_source=seeking_alpha&mail_subject=usb-fed-extends-bank-stock-buyback-ban-till-year-end&utm_campaign=rta-stock-news&utm_content=link-1

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The buyback ban for banks with more than $100B in assets had been slated to expire today (end of the third quarter), but the Fed minutes ago announced it will be extended for one more quarter. Additionally, dividends will continue to be capped and tied to a formula based on recent income.

Capital positions at the large banks have remained strong, says the Fed, but "economic uncertainty" surrounding the pandemic response remains.

The central bank is planning another round of stress tests in Q4, with results to come before the end of the year.

Interestingly, Fed Governor Lael Brainard voted against the extension. A former high-ranking Treasury official in the Obama Administration, Brainard is reportedly on the short-list for Treasury Secretary in a Biden administration. At the moment, it's unknown whether she was against the extension of the buyback ban, or wanted something even stricter put in place.

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