Banking Law

While some big banks are getting ready to feed the gaping pie holes of their shareholders with dividends, investment "guru" Meredith Whitney thinks they would be better off keeping the cash in-house and using it to make strategic acquisitions.

?That?s something I would herald as a shareholder,? she said. ?To me this is the time you make major strategic acquisitions.?

Whitney's words were not taken to heart by big-time bankers, instead being relegated to more remote locations on their bodies.

JPMorgan?s CEO Jamie Dimon told CNBC on Tuesday that the bank is likely to pay a dividend up to a dollar once the stress tests run their course.

In a research note, Wells Fargo said it expects similar announcements by the second quarter from PNC Financial, USBancorp and Goldman Sachs.

Barclays Capital said it expects most of the companies in its 26-bank coverage universe to pay, thought it said the expectations likely will be closer to 20-30 percent of earnings rather than the historical norm of 40-45 percent.

So much for long-term thinking.

On the other hand, TARP-taking banks who've not escaped the TARP trap have had problems getting their federal regulators to permit them to pay dividends on the preferred stock owned by the US Treasury. They've been skipping dividend payments as frequently as I skip Lady Gaga concerts. As a result, the Obama administration "has begun monitoring" those deadbeats and may soon appoint directors (as the Treasury's allowed to do under the terms of the preferred stock). Let's hope that the directors they appoint have seen the inner workings a bank from a vantage point other than seated at a chair in the lobby.

One the deadbeat banks is our old friend, OneUnited, the bank that got Maxine Waters into ethically tepid water prior to the apparent (and mysterious) meltdown of the ethics investigation against her.

A spokeswoman for OneUnited said the bank has deferred payment of dividends "in order to marshal capital and support funding for its new lending programs," which the bank said was "consistent with safe and sound banking practice."

At least they're not paying dividends to Rep. Waters' husband. That's some small consolation.