Stock dividends

The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.

As PPP enters forgiveness phase, some banks see outsourcing as best move; after the Fed’s stress tests, Wells Fargo to cut dividend while other big banks boost capital buffer; Supreme Court strikes down CFPB leadership structure; and more from this week’s most-read stories.

While elevated loan-loss provisions are expected to eat into all banks’ earnings, midsize banks could suffer more than their big-bank rivals because they have fewer revenue drivers. Meanwhile, investors will be watching closely for any signs of dividend cuts stemming from the Federal Reserve’s caps on payouts.

Supreme Court says the president has the power to remove the director at will; the bank is the only one of the six largest U.S. banks to say it will cut its dividend next quarter.

Wells Fargo customers targeted with phishing attacks using calendar invites; Fed freezes stock buybacks, caps dividends after stress test results; Citigroup names Titi Cole its head of global operations and fraud prevention.

The Fed stopped short of banning payouts entirely following bank stress tests; banks get greater freedom to invest in venture capital funds and reduced collateral on swap trades.

The senior official said the Federal Reserve’s gauge of a firm’s performance under economic recovery scenarios will affect decisions about its capital distribution, but individual results of the analysis will not be made public.

Unlike in previous years, the results from two different evaluations will be released simultaneously and will include an assessment of bank capital under coronavirus-related scenarios.

The general structure of this year’s reviews is unchanged despite the pandemic. But a supplemental analysis of banks' response to the downturn could weigh heavily in evaluating 2020 capital distributions and making adjustments to the tests over the long run.

Payouts continue to be relatively generous, but that could change if the Federal Reserve demands banks bolster capital or the economy worsens.

Despite record low mortgage rates, borrowers are having trouble getting loans from wary lenders; the underperforming American unit may be ditched in U.K. bank restructuring.

Large institutions say their strong capital positions allow them to reward investors, and the Fed agrees. But critics say this is the time to be preparing for a sharp downturn and continue helping those hurt by the coronavirus pandemic.

Bank’s earnings fall 69% in the first quarter; this week’s earnings reports could determine whether banks will need to suspend dividends.

Parties talking about a temporary lift of Wells' asset cap; GDP would have to drop an “unlikely” 35% in Q2 before JPMorgan would be forced to stop payouts.

Banks will tell the Fed they would remain strong after payouts; customers would need $250,000 in liquid assets on deposit at the bank to qualify to refinance.

In supporting the economic recovery from the coronavirus pandemic, lenders have a chance to restore public trust damaged in the last financial crisis. But they face tough decisions on dividend cuts, executive pay, furloughs and deeper changes to their business model in the process.

SBA loans could pour billions into bank coffers; Fed bailed out government-backed market, others may suffer.

Sen. Sherrod Brown of Ohio, the top Democrat on the Banking Committee, said financial institutions "need to be investing in their communities right now, not investing in their CEOs’ stock portfolios.”

Complaints made by legacy shareholders of Freddie Mac have no value after the Treasury Department pumped up Freddie and Fannie Mae through conservatorship.

The bank is considering eliminating as many as 20,000 jobs; BIS doesn’t want central banks to fall behind private cybercurrency efforts.