Fed gives OK to 32 of 35 biggest US banks to raise dividends

The Federal Reserve has given the OK to 32 of the 35 biggest banks in the US to raise their dividends and buy back shares, judging their financial foundations sturdy enough to withstand a major economic downturn.

Announcing the results of the second round of its annual stress tests, the Fed also approved the plans of Wall Street powerhouses Goldman Sachs and Morgan Stanley, but on condition they keep their total dividend payouts and stock buybacks at current levels.

The Fed rejected outright the capital plan of the US holding company of Germany's Deutsche Bank.

The yearly check-up tests the banks to determine if their current plans for paying out capital to shareholders would still allow them to keep lending if hit by another financial crisis and severe recession.