Courtesy of Pam Martens
By Pam Martens and Russ Martens
The Federal Reserve will release the results of its stress tests on the biggest and most dangerous banks at 4:30 p.m. today. But the potential results of those tests played a negative role in the stock market’s performance yesterday.
The Dow’s drop of 710 points yesterday can be ascribed to two things: the alarming news reports that COVID-19 cases are skyrocketing in the second and third most populous states in the U.S. – Texas and Florida; and a bombshell report from Bloomberg News released at 7:00 a.m. yesterday morning.
The Bloomberg article, by Lisa Lee and Shahien Nasiripour, cast the Federal Reserve in an unfavorable light over its failure to halt dividend payments at the biggest Wall Street banks, something that European bank regulators have done during the pandemic crisis. Eight of the largest U.S. banks announced in unison on Sunday, March 15, that they would halt share buybacks through the first and second quarter, but they’ve continued to pay cash dividends to shareholders, whittling away critical capital that could serve the struggling U.S. economy far better as loans to consumers and businesses. (Two-thirds of U.S. GDP consists of consumer spending.)
The Bloomberg article dropped this bombshell nugget on what Bank of America, Citigroup, JPMorgan Chase and Wells Fargo had spent on share buybacks and dividends since 2017:
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