The likelihood of IB and Schwab bank runs?

MoreLeverage said:
Schwab has a bank, IB doesn’t.
https://online.schwabbank.com/login.do
https://www.barrons.com/articles/charles-schwab-stock-price-bank-selloff-4bb1ae5f
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I have Schwab accounts and own stock in Schwab. Schwab (which I hate) will sweep their money into Schwab Bank. They say they do it to protect your account (FDIC). But, their rates have always been diddly squat!! Hopefully their bank can be on top of buying and selling treasuries...Not be stuck with 2% 10 year crap...

It ranks 8th on the List of largest banks in the United States by assets. As of December 31, 2022, it had $7.05 trillion in client assets, 33.8 million active brokerage accounts, 2.4 million corporate retirement plan participants, and 1.7 million banking accounts.
 
traider said:
if it has a huge amount of assets it will be subject to risk stress tests
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that may not be correct, if svb put most of its assets into treasury securities as reported, there is no credit risk, so it is safe. the bank will pass the stress test with flying colours.

personally took all cash out from online high yield savings accounts and built a tbill ladder with fidelity, 4, 8, 13, 17 weeks since q3/q4 last year. it was common sense when tbills are paying you 2-3% and increasing. guess banks are hard to be nimble.
 
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mervyn said:
that may not be correct, if svb put most of its assets into treasury securities as reported, there is no credit risk, so it is safe. the bank will pass the stress test with flying colours.

personally took all cash out from online high yield savings accounts and built a tbill ladder with fidelity, 4, 8, 13, 17 weeks since q3/q4 last year. it was common sense when tbills are paying you 2-3% and increasing. guess banks are hard to be nimble.
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Do you have a margin account or a cash account? It is my understanding that investing the cash in treasury bills will not help you if you have a margin account as the treasury bills will not be held in your name.
 
Speaking of IB, they say they have insurance above that offered by SIPC:
https://www.interactivebrokers.com/en/general/account-protection.php

"In addition, Interactive Brokers LLC carries an excess SIPC policy with certain underwriters at Lloyd's of London, which extends the per account coverage by an additional $30 million (with a cash sublimit of $900,000), subject to an aggregate limit of $150 million"

Does this reassure anyone? I don't get the "aggregate limit of $150 million" though. If they go under (which I think is slim to 0 chance), I assume they have much more than 150 million uninsured. That's probably a drop in the bucket.
 
FWIW, it is business as usual and we have no exposure to SVB, Signature Bank or even First Republic. As many mention above, the issue with SVB was their investment in long term bonds (average duration according to their financials of 5.7 years as/of 12/31/22) and cash on hand. They simply didn't have the liquidity to handle the amount of withdrawals and due to the rise in interest rates, if they had to sell their bonds, they would have suffered losses larger than cash required to cover the withdrawals.

At IBKR, the average duration of our portfolio is 30-40 days and while we have to report mark to market monthly to regulators, we do this daily and thus have a great handle on cash/risk management. Thomas Peterffy, chairman and founder of IBKR, was on CNBC explaining much of the same last night. link here but they got the title wrong, it is BILLION not million: https://www.cnbc.com/video/2023/03/...on-in-cash-says-chairman-thomas-peterffy.html
 
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