Why Did Fed Reject Bank of America's Dividend Plan?

In a shocking turn of events, the Federal Reserve has rejected the plan Bank of America (BAC) submitted to raise its dividend "modestly" in the second half of the year. The bank had signaled its new strategy would be to return large amounts of excess capital to shareholders over the next several years, and while this news does not necessarily change the long term story, it does delay the onset. So what caused the rejection? The Federal Reserve told all 19 banks that submitted capital plans that they were not allowed to discuss the findings by the Fed, only whether or not the capital plans were approved. This leaves us in the dark for the large part, and forces us to speculate on why the dividend plan from BAC was rejected. To me, there are 3 problem points that could have led to the rejection. BAC asked for too high... Read more

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