Wall Street, the heart of the U.S. financial system, recently got the thumbs up from the Federal Reserve last Wednesday to buy back stocks and release a slew of dividend increases.

Major U.S. banks have been prompted to increase dividends and as much as US$23 billion in stock buybacks on their shareholders. This was due to the second phase of the Federal Reserve's alleged stress tests in which 29 out of 31 top lenders got the green light to start spending their money on stakeholders.

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Within minutes of the releasing of the stress test results, at least nine major banks have taken actions such as increasing their quarterly dividends, announcing new stock repurchase plans, or even both.

Citigroup, for example, had failed last year's stress test. They will now be boosting their quarterly dividend by five cents a share from one penny. They also announced plans to buy back as much as US$7.8 billion of common stock.

JPMorgan Chase will be increasing quarterly dividend by four cents a share to 44 cents. They will also buy back US$6.4 billion of common stock.

Wells Fargo will be raising quarterly dividends by 7 percent to 37.5 cents a share.

Even Bank of America, which was only given a conditional pass by the Fed, will also be buying back US$4 billion in stock through the second quarter of 2016.

Following the results of the stress test this year, two banks failed it. Thus, the Deutsche Bank Trust Corporation and Santander Holdings USA had the Fed reject capital spending.

The Federal Reserve said that it was due to "widespread and substantial weaknesses across their capital planning processes."

Apart from the two banks, three other banks --- namely Goldman Sachs Group, JPMorgan Chase, and Morgan Stanley ---- were also forced to adjust their original planned capital actions following the first phase of the Fed's stress results last week.

TagsWall Street, Federal Reserve, buyback, Stress Test, U.S. banks