When Citigroup lays off 20,000 employees, as it announced last week it will do by 2026, then Your Survival Guy concludes: not all is right with the financial world.
When Charles Schwab’s stock, the largest publicly traded U.S. brokerage, declines by 17% as it did last year and was down seven percent through Friday of this year, not all is good in the financial world.
When Citi announced its exit from the municipal bond market, as it did recently, who will be the buyer of last resort as it was for so many?
When Citi got into a Second Amendment battle, some states, Texas being the big one, decided it had options. Guess which state issued the most muni debt last year? Don’t mess with Texas.
Meanwhile, if you saw Dumb Money, you know the individual investors it portrays aren’t exactly dumb (maybe a bit too aggressive), and they handed it to the hedge funds during the meme stock craze. That is until their leader was dragged in front of Congress.
Then you have Schwab’s bank division that, like most banks, pays a pittance on deposits and lends at higher rates, held way too many long-term bonds on its balance sheet, and has indigestion from the TD Ameritrade takeover that isn’t going exactly as planned as investors look for greener pastures. (My favored Fidelity Investments is one, for example.)
A lot of the old Schwab money is trading on Robinhood (tagline: Run Your Money).
Between the layoffs, the muni bond debacle at Citi, and if you live in a red state and like your Constitutional rights, you might ask yourself why you’re banking with them.
With Schwab’s stock price decline, there’s always room for improvement. But will there be? “Last year, there were some challenges. Let’s not kid ourselves,” James Kostulias, head of trading services at Schwab, said in an interview earlier this month. “Now that we’re past the vast, vast majority of that, I think there will be more time, energy and resources we can devote to innovation, to growing the business.”
A lot is banking on that.
Action Line: Trust who you bank with, and a lot of problems are solved. Let’s talk about it.
