https://riabiz.com/a/2023/8/8/charles-schwab-corp-goes-back-on-offense-in-banking-promising-to-pump-out-discount-loans-with-ria-help-after-rapid-fed-rate-hikes-exposed-extreme-vulnerability-in-banks-asset-base
Highlights:
"As long as it was able to hold onto the investments, it faced no threat. Schwab was also able to raise cash and faced no significant run on deposits.
But its vulnerability was clear, and the Wurster plan appears to be designed to pump out more loans, like a traditional bank, instead of relying on bond investments to put cash to work...."
"Yet, the Wurster plan still has at least one big drawback, says Jonathan Holtaway, president and manager of Ategra Capital Management, a private equity firm and asset manager in Vienna, Va.
'It will take many years to scale, and it will never match their existing scale in deposits. Think of it as a good little business that will incrementally help them generate earning assets with a good credit and rate risk profile,' he says.
Indeed, clients – by definition asset rich – are not hungering for loans, says Roger Hewins, founder and CEO of Team Hewins, in Redwood City, Calif.
'We don’t have lots of clients looking for loans, but some need them from time to time. This isn’t very exciting, but for a client who needs some short-term liquidity it is useful.'"