White House: Dividend Payments Okay
Top White House officials today defended allowing banks to use federal bailout funds to pay dividends to shareholders, arguing that doing so was part of the effort to revive the foundering economy.
Edward P. Lazear, chairman of the Council of Economic Advisers and President Bush's top economic adviser, also emphasized in remarks at the White House moments ago that the bailout plan passed by Congress does not bar participating banks from continuing to pay dividends at current levels.
"The law was quite specific on what rules to follow," Lazear said. "...We're going to follow the law and make sure there are not abuses, but we want to make sure we get the economy going."
On the overall $700 billion bailout plan, Lazear said: "Taxpayers will not lose significantly on this and may make some money."
White House press secretary Dana Perino said dividends are an important source of income for a wide variety of investors, including pension funds and small business owners.
"Some people believe that only rich people get dividend payments," Perino said. "That is not the case...A lot of people could suffer if they don’t have dividend payments."
The Post's Binyamin Appelbaum reported today that U.S. banks getting more than $163 billion from the Treasury Department for new lending are on pace to pay more than half of that sum to their shareholders, with government permission, over the next three years.
The U.S. approach contrasts with decisions by foreign governments, including Britain and Germany, to require banks that accept public investments to suspend dividend payments until the government is repaid.
The U.S. government similarly required Chrysler to suspend its dividend payments as a condition of the government's 1979 bailout.
-- Dan Eggen
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