Fed Rejects Bank of America's Dividend Hike Plan

Bank of America said Wednesday the Federal Reserve has rejected its plan to raise its dividend in the second half of this year, according to a story by the AP.

The bank has been paying a dividend of $0.01 per share since the financial collapse, a requirement of its TARP payment. In mid-2008, B of A paid a 64 cent-per-share dividend. It now wants to return to a dividend more similar to those of the good ole days.

But the Fed said that an increased dividend at this juncture wouldn’t be prudent due to the results of B of A’s “stress test,” administered to gauge the bank’s ability to weather another economic storm. The Fed said last week that banks that passed the stress test were free to increase their dividends.

Bank of America’s credit card unit is the primary culprit in the stress test results, according to the AP. Still, the Fed said that B of A could resubmit their request at any time for further testing.