Fiscal stimulus packages 'can't get everything right': Former Vice Chairman of U.S. Federal reserve
U.S. Federal Reserve Chairman Jerome Powell said he sees no reason “at this time” why U.S. banks need to suspend dividends to preserve capital amid the deepening coronavirus economic crisis.
Powell, speaking Thursday on a Brookings Institution webcast, said lenders currently have strong capital buffers to absorb financial shocks. Powell added that the biggest U.S. banks have already halted share buybacks to preserve cash, a decision he called a “good thing.”
The Fed chairman’s remarks echo those of U.S. bank leaders. Goldman Sachs Group Inc. Chief Executive Officer David Solomon vowed last week to keep paying the firm’s dividend, saying that such distributions make up a much smaller part of capital returns to investors than buybacks. Morgan Stanley CEO James Gorman and Citigroup Inc. CEO Michael Corbat have also pledged to maintain dividends.
Questions about halting dividends have gotten a lot more attention after many European banks shelved them in response to the coronavirus pandemic.