The Federal Reserve has concluded that major U.S. banks are financially strong enough to endure a potential economic downturn, paving the way for these institutions to raise dividends to shareholders. According to Reuters, this assessment comes after the Fed completed its annual stress tests, which simulate how banks would fare under adverse economic conditions. The results indicate that even in a hypothetical severe recession, banks would maintain sufficient capital levels to continue operations and absorb losses. This outcome is expected to reassure investors and allow banks to return more capital to shareholders through increased dividends and share buybacks.
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Fed says banks can withstand economic downturn, clears way for dividend hikes Reuters