Many large U.S. bank holding companies (BHCs) continued to pay dividends during the 2007-09 financial crisis, even as financial market conditions deteriorated, large losses accumulated, and emergency capital and liquidity were being provided by the official sector. In contrast, share repurchases by these BHCs dropped sharply in the early part of the crisis. Documenting this divergent behavior is one of the key contributions of this paper. The paper also examines the role that repurchases played in large BHCs’ decisions to reduce or eliminate dividends. The key findings are that smaller BHCs in the sample with higher levels of repurchases before the financial crisis reduced dividends later and by less than BHCs with lower pre‐crisis repurchases, suggesting that repurchases may have served as a cushion against cutting dividends. In contrast, there is only a weak relationship between pre‐crisis repurchases and the timing and extent of dividend reductions for the larger BHCs, even though these BHCs were more likely overall to reduce or eliminate dividends during the crisis.