A group of US Senators, led by Democrat Brian Schatz of Hawaii, want America's banks to stop paying dividends during the pandemic recession. The goal is to ensure they are able to absorb losses they might face.
The senators, which included Massachusetts Senator Elizabeth Warren, also urged the Federal Reserve in a letter to make sure the banks held enough capital to continue lending to struggling businesses.
The results of the Fed's bank stress test, which assesses their capital buffers during crises, are due tomorrow.
“Our economy needs a safe and sound banking system to serve as a source of strength through these difficult times,” the senators wrote in their letter Wednesday
This isn't the first call for banks to stop paying out dividends. Former Fed Chair Janet Yellen is also in favor of a pause given the uncertainty the economy is facing.
The Covid-19 recession has made many businesses reliant on credit lines after the economy shut down in the spring to stop the spread of the virus.