Bullard offers alternatives to cutting reserve bank dividend

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James Bullard

The dividends paid by Federal Reserve banks could be made more flexible – or even eliminated altogether – as an alternative to lowering the rate paid to the largest member banks, St Louis Fed president James Bullard has said.

Each year the reserve banks pay a dividend to the ‘member banks' that provide their capital. As part of efforts to fund transportation projects in the US, some lawmakers are advocating the dividend is cut to 1.5% for any member bank with more than $1 trillion in assets.

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