The Fed is planning to lift restrictions on dividends and share buybacks for most banks after June 30.
The temporary restrictions were imposed amid the coronavirus pandemic ‘s economic impact. Last June, the Fed required banks to suspend share buybacks in the third quarter and to cap shareholder dividends to the amount paid in the second quarter. However, with the economy improving, the Fed said it would lift the restrictions on banks with capital levels above those required by the stress tests. The Fed’s stress tests examine major banks’ balance sheets and their ability to withstand unusual/adverse financial events.
"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," Vice Chair for Supervision Randal K. Quarles said.