The US Federal Reserve is extending until the end of the year its restrictions on large banks and financial services companies paying out dividends and buying back stock.
The Fed made the announcement on Wednesday aimed at bolstering US banks as the coronavirus pandemic has causes millions of Americans to fall behind on mortgages, credit card payments and auto loans.
All banks with more than $US100 billion ($139.7 billion) in assets will still to be able to pay dividends, but they will remain capped at their levels before the original restrictions went into place in June, the Fed said. Stock buybacks will remain restricted until the end of the year.
The central bank enacted the original restrictions in June, as part of its annual stress tests for the nation’s 33 largest banks. The Fed said that the risk of a double-dip recession was too great, and would put too much stress on banks’ balance sheets, causing many of them to fall below critical capital levels.