Big banks will lose a portion of a multibillion-dollar government handout they’ve enjoyed for over 100 years, thanks to a compromise highway bill released Tuesday. One estimate pegged the loss to the banks at $8 billion to $9 billion over a 10-year time frame.
The bill, as it emerged from a House-Senate conference committee, pays for roads, bridges, and mass transit projects in part by reducing what is currently a 6 percent annual dividend on stock that the big banks buy to become members of the Federal Reserve system.
Fed membership offers many perks, from access to processing payments to cheap borrowing. But the dividend could be the sweetest gift, because banks cannot ever lose money on the stock; they’re even paid out if their regional Fed bank disbands.
Despite the total lack of risk, member banks have received the 6 percent dividend payout every year since 1913.