[manaboutown]

The WSJ and Barron's have some good articles on the Schwab Bank situation. Actually, as many others do, I keep most of my liquid funds in money market accounts at Schwab and other brokerage houses. The articles point out that since interest rates have increased people are moving their liquid funds from bank accounts into money market funds, as I have. That is a large part of the problem for Schwab and other banks. Also, as most of us realize, by April 18, 2023 bank accounts will be hit with withdrawals to pay taxes.

My Schwab broker is OK. I am not faulting him although I chuckled when he told me he was calling all his clients on his own. Until about a year ago I had never heard from anyone at Schwab as I had just kept a small account there. When I deposited a substantial sum this guy called me out of the blue. We had a nice conversation during which I explained I had other brokerage accounts. He aggressively urged me to transfer those accounts into Schwab (he would make a lot more money of course). When I told him no, I remember Lehman Brothers and others and did not want to put all my eggs into one basket he was not happy.

For now I am fine with keeping securities with Schwab and have no plans to close my account.

[fgaba1949]

I think you might be concerned IF you understand what is causing the present situation ...and have a smaller bank ...again a big difference between a big bank and a community or regional bank. .
As a retired banker I truly hope that all of the readers understand that if there was a TRUE run on all of the banks in the US. There is no way the US could cover the FDIC loans to $250,000 it just isnt possible no matter how fast the printing presses can print money.
The stock market would collapse and The banks would have no choice to close and say that they will open at a later time...
The US government would have no choice but to bail out the huge banks like JP Morgan

Do i think that will happen .. No but it could get very messy as long as YIELDS are inverted meaning
in simple terms that means
u get more interest on short Term T NOTES rather than on long term T NOTES..That is not normal and definately NOT good for banks or any Fianacial for obvious reasons

[manaboutown]

Money has been moving from bank accounts into money market funds. Subscribe to read | Financial Times

[villagerjack]

Banks have always carried their trading portfolios marked to market and investment portfolios at cost. Depending on where interest rates are the investment portfolio if marked to market will either be worth more or less than the value it is carried at. Those are the rules for decades so there is literally zero risk if people don’t panic and withdraw all their money . In addition the Fed will lend against these investnent securities at par virtually eliminating duration risk.

[lawgolfer]

I have several accounts at Schwab which date to when it first opened for business. Over the years, I have had nothing but praise for Schwab for its low trading fees, customer service, and breadth of financial products.

That said, a few years ago, Schwab created a problem for all its customers who trade stocks and bonds when it opened the Schwab Bank. The problem is that all cash in an account is automatically "swept" into the Bank, which, for the past several years paid little or no interest. Also, there was no limit on the amount which would be "swept" into the Bank. Thus, it has been very easy for accounts at the bank to exceed the $250K limit for FDIC insurance, while, at the same time, earning little or nothing in interest.

If you have brokerage accounts at Schwab and actively trade in amounts in excess of $250K, you have to give specific instructions for your cash to be kept in a different account and not at the Bank. Probably, the best type for this is Schwab's money market fund, symbol SWVXX, which invests in a mix of U.S. Treasury notes and highly rated corporate notes. All these have short maturities and are extremely liquid. If you don't want any risk and complete liquidity, Schwab's SNOXX fund invests only in U.S. Treasuries and is 98% liquid daily and 100% weekly. Schwab has 9 money market funds, each of which invest at different ratios in U.S. Treasuries and corporate obligations, giving you an multitude of options, including funds which are tax-free both for Federal and State income taxes. Of course, no money market fund, be it one of Schwab's, Vanguard's, or any other brokerage, has FDIC insurance.

[CoachKandSportsguy]

Maybe Schwab is worried about customers because their credit default swaps price (bets on the company defaulting on their bond interest payments) exploded higher on Friday

[jacRI]

If your CDs are in your name alone you are only covered by FDIC for $250,000. Each person is insured, not each account.

[Kabbage]

Originally Posted by manaboutown

I received a phone call from my stock bookie at Schwab a couple days ago. He asked me if I was concerned about Schwab Bank, went on to point out about how large it was and so on. He told me he was calling all his clients. Then he asked me if I had any questions. I said not really and told him that I had a general understanding of why SVB was in trouble; it invested long at low interests rates and now was forced to borrow short at higher interest rates. As he seemed nervous I asked him if he was doing damage control. He did not take that question well. After a more or less inconsequential and somewhat strained affable conversation about the weather and such we ended the call.

Then, I got on the internet and discovered Schwab was taking some heat and its stock was down. Turned out Schwab had also gone long on low interest bond investments, was in a pickle to some extent and was assuring folks they had what it took to cover the bases.

Very interesting...

I think you need a new broker. FAST!!!!

[OrangeBlossomBaby]

All this talk about how it's only accounts in small banks has me wondering: we have Citizens First Bank - there's also Truist, which is pretty small. There's also Vystar.

I don't "invest" in any banks, our annuities are with the Knights of Columbus, which has been and likely will always be stable. As long as there are Catholics, there will be the Knights.

But I am considering opening a Citizens First account to deposit my social security checks when they start coming in July so - should I just stick with Bank of America?

[Worldseries27]

Originally Posted by manaboutown

i received a phone call from my stock bookie at schwab a couple days ago. He asked me if i was concerned about schwab bank, went on to point out about how large it was and so on. He told me he was calling all his clients. Then he asked me if i had any questions. I said not really and told him that i had a general understanding of why svb was in trouble; it invested long at low interests rates and now was forced to borrow short at higher interest rates. As he seemed nervous i asked him if he was doing damage control. He did not take that question well. After a more or less inconsequential and somewhat strained affable conversation about the weather and such we ended the call.

Then, i got on the internet and discovered schwab was taking some heat and its stock was down. Turned out schwab had also gone long on low interest bond investments, was in a pickle to some extent and was assuring folks they had what it took to cover the bases.

Very interesting...

don't contact me. I know a guy who knows a guy

[Two Bills]

Originally Posted by fgaba1949

I dont think their is any problems with the huge banks as they are SIMPLY too big to FAIL...

Credit Suisse would argue that point.

[CoachKandSportsguy]

This morning, one of the Citizen's bank took over SVB,

not sure if it was Citizen's Bank, First Citizen's Bank or Citizen's First Bank. . .

The winner beat out Second Bank and Fifth Third Bank

[OrangeBlossomBaby]

Originally Posted by CoachKandSportsguy

This morning, one of the Citizen's bank took over SVB,

not sure if it was Citizen's Bank, First Citizen's Bank or Citizen's First Bank. . .

The winner beat out Second Bank and Fifth Third Bank

It's First Citizens BancShares Inc. which is considered a large bank (one of the biggest in the USA).

Citizens First bank (which is the one I was asking about) is owned by the Morse Family and is exclusive to the Villages and surrounding areas.

[rustyp]

Originally Posted by OrangeBlossomBaby

All this talk about how it's only accounts in small banks has me wondering: we have Citizens First Bank - there's also Truist, which is pretty small. There's also Vystar.

I don't "invest" in any banks, our annuities are with the Knights of Columbus, which has been and likely will always be stable. As long as there are Catholics, there will be the Knights.

But I am considering opening a Citizens First account to deposit my social security checks when they start coming in July so - should I just stick with Bank of America?

Truist is the 7th largest bank in America, It is also one of the 20 D-SIB banks. Bank of America is the 2nd largest bank in America and 1 of 8 US G_SIB banks. You are correct about Citizens First bank - community bank - small potatoes.

[MrFlorida]

Could it be the broker just wanted you to change investments, giving him a nice commission ? In the industry, it's called Churning.