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Banks whose plans were rejected would have to get approval before distributing capital.
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And, if capitalism is supposed to help us efficiently distribute capital to the best possible use, then we are succeeding in the creation of an anti-capitalist economy.
(This is the time of year when funds distribute capital gains).
Few funds, no matter how poor their performance, failed to distribute capital gains, which are taxable to shareholders even if automatically reinvested.
Citigroup, for example, outperformed its rivals in the test just one year after a poor performance embarrassed the bank and thwarted its plans to distribute capital to shareholders.
Even so, analysts expected JPMorgan and Goldman to gain outright approval for their plans to distribute capital to shareholders through dividend payments and stock buy backs.
Some private equity firms have begun to look like old-style conglomerates such as Hanson or ITT, consisting of a small headquarters whose main task is to distribute capital and choose the right people to run the businesses in their portfolio.
It distributed capital gains amounting to 31% of their account balances.
Funds are required to distribute capital gains (if any) to shareholders at least once per year.
The fund would then be required under tax law to distribute capital gains among shareholders who remain.
We figure in tax on distributed capital gains but not on the unrealized appreciation in the fund's shares.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com