Federal Reserve Extends Restrictions on Share Repurchases and Dividend Payments by Large Banks and Other Measures to Support Capital Resilience

On September 30, the Board of Governors of the Federal Reserve System (Federal Reserve) announced it would extend for the fourth quarter of 2020 prohibitions on share repurchases and caps on dividends by large banks having more than $100 billion in total assets. Although the most recent stress tests affirmed large banks were sufficiently capitalized, the Federal Reserve appears to be focused on continuing to preserve banks’ capital levels amid economic uncertainty caused by the pandemic.

On October 1, the Federal Reserve also announced it would extend additional temporary actions it had taken in April until March 31, 2021 that had otherwise been set to expire on September 30 of this year, including suspending uncollateralized intraday credit limits (net debit caps) and waiving overdraft fees for institutions that are eligible for the primary credit program, along with permitting a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps), and suspending the collection of information under the Annual Daylight Overdraft Capital Report for U.S. Branches and Agencies of Foreign Banks (FR 2225) and the Annual Report of Net Debit Cap (FR 2226).