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Monday, February 27, 2017

GAO: Fed Officials, Bankers Concerned About Dividend Cut

A Government Accountability Office report has found that although the change in the Federal Reserve dividend rate has had little short-term effect on Federal Reserve membership and bank operations, concerns arise for the future.

The GAO said:
Commercial banks and Federal Reserve officials we interviewed expressed some concerns about the dividend rate modification. Certain Federal Reserve officials with whom we spoke were concerned about increased membership attrition as a result of the dividend rate modification.

Fed member banks with less than $10 billion in assets were worried that the 2015 bill reducing the dividend would set a precedent for “future transfers from the Reserve Banks, and that they would reconsider Federal Reserve membership if the dividend rate threshold were reduced to include banks in their asset range,” the GAO noted.

Read the report.

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