How Bank of America's $4 Billion Mistake Cost Investors Their Dividend Increase

Bank of America has notified the Fed that it mistakenly reported $4 billion in additional capital, meaning it can no longer increase its dividend or repurchase shares. How badly does this damage the credibility of the bank, or the Fed's stress tests?

Apr 29, 2014 at 6:09PM

After initially passing the Federal Reserve's recent round of stress tests and being granted the ability to raise its dividend and initiate a share repurchasing program, Bank of America (NYSE:BAC) has now notified the Fed that it mistakenly reported $4 billion in additional capital. The bank will now be forced to suspend its planned increases to shareholder distributions.

In this segment from Tuesday's Investor Beat, host Alison Southwick and Motley Fool analysts Mike Olsen and Brendan Mathews look at how an error of this size could have happened, and just how badly this could damage the credibility of both the bank and the Fed's stress tests. Mike also mentions that this demonstrates just how many unknowns there truly are for investors in banks of this size.

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Alison Southwick, Brendan Mathews, and Michael Olsen, CFA, have no position in any stocks mentioned. The Motley Fool recommends Bank of America and owns shares of Bank of America and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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