Small Banks Escape Fed Dividend Cut in Hill Talks — for Now
By Victoria Finkle and John Heltman

WASHINGTON — Community banks are poised to score a big win as early as Tuesday afternoon in negotiations over a major highway spending bill.  As lawmakers try to resolve differences between House and Senate legislation over how to pay for the transportation measure, several sources say the latest version backed by the congressional conference committee would spare institutions with less than $10 billion in assets from a cut on their Federal Reserve dividends. Such a dividend cut was previously included for a wider scope of institutions in the Senate bill, but the conference report is said to reduce dividends only for institutions above the $10 billion threshold. The final plan is looking to be a combination of the two strategies, with the funding burden falling on two constituencies often criticized on Capitol Hill: the Fed and big banks. Karen Shaw Petrou, managing partner of Federal Financial Analytics, said the prospect of finding new money that would only affect larger banks in the one case and Fed regional banks on the other is attractive politically for lawmakers. “What I could guess it means is that the dollar signs were just so big that what, everybody just wanted them all,” she said. “That which you take from banks — especially bigger ones — is easier than that which you have to take from other people, so that’s what they took.”