Reports on recession See all →
Capping dividends and stopping buybacks: Governments want pessimism
Through its policies, the U.S. Federal Reserve is implying that the banking sector is in danger. By curbing dividends and prohibiting buybacks, it will force banks to accumulate large amounts of cash, insulating them against bank runs that may never come. In fact, the likeliest outcome is that U.S. banks will find themselves with too much cash in their vaults and the Fed measures will have only slowed the economy.