So, this is literally the market reacting the news of SVB & SBNY going into receivership and taking a dump in the whole financial sector.
And even if Schwab had svb symptoms, the Fed facility announced yesterday fixes it. That program gives loans of up to a year with collateral priced at face value, not market value.
There is zero risk of Schwab running out of cash to cover deposits.
...I'm not sure how much of that is new information though. So while bankruptcy is not likely, a depressed stock price may still make sense.
I think you meant Charles Schwab there, Mr GPT.
The regulations that required that cash had been, in the past, seen as a detriment to the banks and people argued that the regionals would be strangled if they had the same requirements.
Right now specifically, it's not great to be really large but not a money center bank.
E.g. I have hundreds of thousands of dollars in stocks in my brokerage account, but $100 in uninvested « float ».
They could invest that $100 to make some money for themselves, but that’s where they might be taking some risk. If they screw it up and don’t have my $100 available, they can’t go fractional on my stocks to make up for it.