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Why the Fed Ignored Warnings and Let Banks Pay Shareholders Billions

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This story first appeared on the ProPublica website.

In early November 2010, as the Federal Reserve began to weigh whether the nation's biggest financial firms were healthy enough to return money to their shareholders, a top regulator bluntly warned: Don't let them.

'We remain concerned over their ability to withstand stress in an uncertain economic environment,' wrote Sheila Bair, the head of the Federal Deposit Insurance Corp., in a previously unreported letter obtained by ProPublica.

The letter came as the Fed was launching a 'stress test' to decide whether the biggest US financial firms could pay out dividends and buy back their shares instead of putting aside that money as capital. It was one of the central bank's most critical oversight decisions in the wake of the financial crisis.
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opednews.com

OpedNews volunteer from 2005 to 2013.

Amanda Lang was a wonderful member of the Opednews team, and the first volunteer editor, for a good number of years being a senior editor. She passed away summer 2014.

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