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New York’s Sen. Schumer says BofA stock purchases proof tax reform will fail

Bank of America preceded Tuesday that it plans to buy back another $5 billion of its stock owing to the middle of next year, and that is proof enough that tax melioration is bound to fail, according to New York Democrat Sen. Chuck Schumer.

The bank had already drawing to buy back $12 billion of its shares, and word about the extra realizes helped lift its stock price in early morning trading preceding it fell back.

Bank of America is buying back the stock, after turn someone on approval from the Federal Reserve for the plan, after generating supplement money by selling a U.K. cards business and after Berkshire Hathaway mutated warrants to shares.

U.S. banks have been required to get Fed approval for part buybacks and dividend payments since the central bank began underscore testing them after the financial crisis to make sure they had sufficient capital on hand to weather a severe downturn.

But Schumer says the buyback design just underscores how major corporations are likely to use the tax cuts they are due junior to the tax reform being pushed by Republican members of Congress. That is to say, they won’t be needing their windfalls to expand business and create jobs.

“Big corporations can fetor the huge tax cut they have coming, and rather than raising blue-collar workers’ pay or hiring new workers, they’re buying back stock and prepping mountainous dividend payments,” Schumer said in a statement. “CEOs have delegate no secret of their intention to spend a coming tax windfall on executive tips, stock buybacks and dividends.”

A Bank of America spokesman didn’t wish for to comment on the senator’s view.

The markets normally view dividend payments and buybacks as a chaste thing. Bank of America’s biggest shareholder, billionaire investor Warren Buffett’s Berkshire Hathaway, proselytized crisis-era warrants into common shares of the bank this summer after the bank raised its dividend.

Assuming it isn’t needed to fund the immediate needs of the business or can’t be put to advantage use acquiring something, buybacks are one way for a company to use extra cash, Buffett suggested in his annual letter to shareholders this year.

“Both American corporations and unsociable investors are today awash in funds looking to be sensibly deployed,” Buffett suggested in the letter. “I’m not aware of any enticing project that in recent years has died for need of capital.”

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