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Charles Schwab CDS action surges; potential bank failure?

CEO says can withstand bank run but likely will require government intervention. Raises question of what constitutes real money?

Author

Don Ranalli
March 25, 2023

👋GM DeFions

Key Points

  • Charles Schwab is facing increased credit default swap (CDS) activity, raising concerns of potential bank failure and the need for government intervention.

  • While the CEO claims they can withstand a bank run, their engagement in fractional reserve banking and potential balance sheet holes contradict this statement.

A credit default swap (CDS) is a financial derivative that allows an investor to swap or offset their credit risk with that of another investor. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse them if the borrower defaults. If you have seen the movie, “The Big Short”, this is what the main characters were buying to bet against the housing market bubble.

The amount of CDS action on Charles Schwab has SKYROCKETED the last few days. Charles Schwab ranks 8th on the list of largest banks in the United States by assets. As of December 31,2022, it has $7.05 trillion in client assets, 33.8 million active brokerage accounts, 2.4 million corporate retirement plan participants, and 17 million banking accounts.

Is Charles Schwab the next potential bank failure to occur in the United States? 

Do you think that the government will allow this domino to fall? The potential answers to those questions ALL involve PRINTING more money to either backstop deposits to provide fresh liquidity to stop a potential bank run.

The CEO of Schwab came out and said, “we can withstand a potential bank run”. This statement is BOTH False, as well as true. False in that they engage in the SAME Fractional Reserve Banking system that the rest of banks engage in, and a call on ALL deposits would expose HUGE holes in their balance sheet, hence why the swaps are occurring. True, because most likely the Federal Reserve will step in, either like they did with SVB and saved depositors, or with how Credit Suisse was saved by a larger bank.

So, the question to answer now……What constitutes REAL money now? Would you consider an infinity create-able money to be the most sound and trustworthy still? Or are you starting to see what Bitcoiners have been saying for over a decade now? How you answer this question now, is detrimental to your future.

Thank you for your attention!

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