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Janet Yellen open to US banks paying dividends, repurchasing stock

Treasury Secretary Janet Yellen mentioned on Wednesday that US banks look wholesome sufficient to be allowed to pay dividends and repurchase inventory, an up to date view that displays prime financial officers’ rising confidence within the restoration from the coronavirus pandemic.

Yellen made her feedback in a second day of testimony in Congress alongside Federal Reserve Chair Jerome Powell. The hearings are a part of a quarterly financial replace they’re required to make.

Requested by Senate Banking Committee Chairman Sherrod Brown if she opposed banks paying dividends and shopping for again inventory, Yellen mentioned she was beforehand against financial institution inventory buybacks, however monetary establishments look more healthy now and “ought to have some capability to, abiding by the principles, to make returns to shareholders.”

Yellen and Powell, in ready remarks that mirrored these delivered on Tuesday earlier than the Home of Representatives Monetary Companies Committee, supplied an optimistic outlook for the economic system, fueled by expectations for continued progress in opposition to the pandemic because of vaccine rollouts and one other $1.9 trillion of federal reduction spending simply getting underway.

“It will be a really, very sturdy yr within the probably case,” Powell mentioned in response to a senator’s query on the financial outlook.

The US financial restoration is evolving quicker than anticipated, however nonetheless faces dangers from the pandemic on one aspect and potential inflation on the opposite as large fiscal assist rolls by way of the system.

The federal response to the disaster, together with spending of about $5 trillion and appreciable assist from the US central financial institution, set the stage for a rebound now taking maintain because the COVID-19 vaccination program features momentum and pandemic restrictions are lifted.

Nevertheless, it stays unclear how rapidly hundreds of thousands of still-unemployed employees will discover their means again to jobs, whether or not the Fed can maintain markets on an excellent keel amid rising costs and bond yields, and if preliminary progress in opposition to the pandemic could be sustained.

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