Local News
2:50 am
Mon April 28, 2014

Bank Of America Suspends Dividend Increase After Misreporting To Fed

Bank of America has suspended its planned dividend increase, after the Federal Reserve found problems in data the bank reported during its most recent stress test.

Credit Julie Rose / WFAE

The stress tests are part of the 2010 Dodd-Frank financial law passed after the crash and recession. The Federal Reserve analyzes the capital and health of the nation’s largest financial firms, to ensure they are not in danger of failing. Bank of America says it misreported some liabilities from the 2009 acquisition of Merrill Lynch, during its latest test.

Bank of America’s stock dropped about 80 cents after the announcement, to $15.18. But bank analyst Bert Ely says this is not a big deal.

“Last month, the Fed denied the capital plans of five other large financial firms, so this is not an unusual occurrence,” says Ely. “Somewhat embarrassing, but it’s not unusual and not something people ought to be concerned about.”

Ely says the tests are new, and banks and the Fed are still working out the kinks.

A Wells Fargo analysis said the misstatement does not reveal any material weaknesses in the bank, but the hit to its reputation may hurt its stock in the short term.

The planned dividend increase is suspended until the Fed approves a new capital plan for the bank. The bank has 30 days to submit that plan, with correct numbers.