Fed To Urge Banks to Stop Paying Dividends and Start Making Loans (WFC, USB, PNC)

The Federal Reserve is urging Wells Fargo (NYSE: WFC) and other banks that received government bailout funds to put the money into new loans or bolster loss reserves instead of paying dividends, according to reports from Bloomberg.

The Fed made the suggestion in a letter that is being sent to regional bank supervisors.

JP Morgan (NYSE: JPM) appears to be already heeded this advice, cutting its quarterly dividend 87% from $0.38 to $0.05 per share last night.

Wells Fargo is still paying a quarterly cash dividend of $0.34 per share. US Bancorp (NYSE: USB) is paying a $0.425 per share quarterly payout. PNC (NYSE: PNC) is paying a $0.66 per share quarterly payout.

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