Fed to allow healthy banks to increase dividends, sources say

11/5/2010 | Reuters · Wall Street Journal, The

The Federal Reserve plans to issue updated guidance in a few weeks on which banks can increase their dividend payments, sources said. Regulators have resisted calls from the banking industry to boost dividends, citing concerns about new capital and liquidity requirements and the economy. However, the central bank does not want to block strong banks from increasing dividends. Industry executives welcomed the shift. "The economy and many older Americans rely on dividends and, if a bank is strong enough, it should be allowed to resume paying dividends," said Scott Talbott, senior vice president of government affairs at The Financial Services Roundtable.

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