Banks Likely to Increase Buybacks and Dividends During Trump Administration

Large banks are reporting excess capital of greater than $120 billion and in the current market environment are expected to increase buybacks and dividends for the benefit of shareholders; the increased capital is primarily the result of higher Federal Reserve capital requirements for banks following the financial crisis; the higher requirements have helped to increase banking capital ratios to more than 12% of risk weighted assets from 5.5% in 2009; under the new administration, capital ratios are likely to be lowered resulting in more capital returned to shareholders; the Fed’s influence is also trending towards lower capital requirements specifically in their 2017 stress test guidelines and also following the resignation of the Fed’s lead supervisor, Dan Tarullo.  Source