America’s largest and most important lenders are temporarily suspending their stock buybacks so they can help pump money into an economy battered by the coronavirus pandemic
“The COVID-19 pandemic is an unprecedented challenge for the world and the global economy and the largest U.S. banks have an unquestioned ability and commitment to supporting our customers, clients and the nation,” said the Financial Services Forum, an advocacy group for banks, on behalf of the eight lenders.
These banks were set to submit capital plans to the Fed in coming weeks as part of their annual stress tests. Instead, they alerted Fed of their intention to suspend repurchases, but kept open the option to reinstate buybacks when economic circumstances warrant. The move is a sharp contrast to the reckless financial plans banks pursued during the 2008 crisis-era, when many firms prioritized shareholder returns over supporting the health of the economy, or even their own balance sheets. Firms like Citigroup, Lehman Brothers, Bear Stearns and Merrill Lynch irresponsibly bought back stock and paid out hefty dividends well after signs of a meltdown and their own capital insufficiency were evident. The behavior backfired.
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