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Banks’ Dividend Outlook Gets Murky With Fed’s Stress Test Twist

June 23, 2020, 9:00 AM

Banks and their investors have for years lobbied the Federal Reserve for more transparency in the annual exam that determines how much profit they can hand out to shareholders in the form of buybacks and dividends.

This won’t be the year.

Amid a global pandemic, the central bank is adding a sensitivity analysis that seeks to capture how financial firms are positioned to handle the new financial pressure. That will guide policy makers in approving payouts, but won’t show up when the results of the stress tests are released on Thursday, leaving investors guessing whether each bank’s dividend is safe. ...

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