Treasury, Fed and FDIC Weighs In On Financial Company Dividend Policies
In its joint statement, U.S. banking regulators (Treasury, Federal Reserve and FDIC) commented on dividend policies for financial companies. They said they will "take action when dividend policies are found to be inconsistent with sound capital and lending policies."
From the Statement:
"In particular, in setting dividend levels, a banking organization should consider its ongoing earnings capacity, the adequacy of its loan loss allowance, and the overall effect that a dividend payout would have on its cost of funding, its capital position, and, consequently, its ability to serve the expected needs of creditworthy borrowers. Banking organizations should not maintain a level of cash dividends that is inconsistent with the organization's capital position, that could weaken the organization's overall financial health, or that could impair its ability to meet the needs of creditworthy borrowers. Supervisors will continue to review the dividend policies of individual banking organizations and will take action when dividend policies are found to be inconsistent with sound capital and lending policies."
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