Squawk Pod – Regional Bank Stress & Schwab’s Record Quarter (10/17/25)

Episode Overview

On the October 17, 2025 episode of Squawk Pod, CNBC’s Joe Kernan, Becky Quick, and Andrew Ross Sorkin tackle this week’s mounting concerns around the stability of regional banks following exposure to bad loans and recent bankruptcies. The team breaks down the market’s volatile reaction, worries over credit—especially in the opaque private credit market—and the broader ripple effects on U.S. and European financial sectors. Charles Schwab CEO Rick Wurster joins to discuss Schwab’s record quarter, shifts in investor demographics, the meaning behind strong retail flows, and how Schwab views modern portfolio strategy amid all the angst. The episode also surveys a weak economic sentiment, looks at the Ray Ban-Meta smart glasses boom, and provides an exclusive update on U.S.-China trade talks.

Key Discussion Points & Insights

1. Regional Bank Stress Shakes Global Markets

• Backdrop:
  • Ongoing concerns about the credit markets, particularly related to bad loans at mid-sized U.S. banks, have led to significant declines in regional bank stocks.
  • Notable regional banks such as Zions and Western Alliance were hit due to their involvement in loans tainted by alleged fraud. The broader market remains jittery, watching for cracks in credit quality. (02:22–05:00)
• Market Impact:
  • “The VIX has doubled in the last three weeks. It’s almost 30…and you got treasuries yields falling.” – Joe Kernan (03:10)
  • The S&P Regional Banking ETF (KRE) fell over 6%, marking its fourth consecutive week of declines.
  • Cumulative loss of over $100 billion in market value across 74 major U.S. banks in recent days.
  • “The bankruptcies of two auto industry related companies this year have also raised concerns about loose lending practices, especially in the opaque private credit market.” – Joe Kernan (04:30)
• International Effects:
  • European banks also took a hit, with some major institutions dropping by up to 7%, yet year-to-date, they’re still up 40%. (06:34)

2. Credit Market Cracks & Private Credit Fears

• Detailed Reporting:
  • Leslie Picker highlights that every bank with a loan book was in the red Thursday, singling out losses and legal fallout at Zions and Western Alliance.
  • “Credit concerns...very much front and center. Regional banks plummeting. Alternative asset managers, PL Jefferies, tanked once again...” – Leslie Picker (07:51)
  • Exposure for individual banks is relatively small (under 2% of tangible common equity), yet market sentiment is on edge, watching for contagion.
  • Clarification: “Bank of California has minimal exposure but it’s senior in the capital structure...not Bank of America.” – Leslie Picker (09:53)
• Analyst Viewpoint:
  • No apparent signs of a systemic, broad-based issue—though volatility and high-yield credit spreads are being monitored closely. (19:08–19:49)

3. Schwab’s Record Quarter & CEO Rick Wurster Interview

(12:31–22:35)

Schwab Smashes Records:

• Schwab announced record Q3 profits: $2.36 billion, up 27% year-over-year, client assets hit an all-time high at $11.59 trillion, and over a million new brokerage accounts for the fourth consecutive quarter.
• Demographics Shift:
  • “Schwab is pretty hip...We’re actually the most followed financial services company on YouTube, which often surprises people. And we’re winning with the young investor—a third of our new households are Gen Zers under the age of 28.” – Rick Wurster (15:34)
• Competitive Landscape:
  • Schwab remains dominant in retail trading (7.4 million daily average trades, beating Robinhood and Morgan Stanley).
  • “Everyone’s coming after us because we are the leader and there isn’t a close second...we win by delivering the broadest experience in the industry.” – Rick Wurster (14:56)

Client Behavior & Portfolio Strategies:

• “Active traders have been buying dips, selling the rips. Long-term investors—when they call—we talk about diversification, not trying to time the market.” – Rick Wurster (16:30)
• Schwab encourages balancing concentrated stock positions, using strategies like options and exchange funds to avoid significant tax hits (21:22).
• Notable Stat: Top 10 stocks are now 38% of the S&P, more than double from 10–15 years ago—driving conversations around the need to diversify.

Alternatives, Crypto, and Bonds:

• Schwab sees huge interest in crypto ETFs and private assets; 20% of all U.S. crypto ETF assets held by Schwab clients; visits to their crypto site are up 90% YoY (17:43).
• Bonds are “cool again,” as rates drop, with increased client interest (17:21).

Credit Risk Perspective:

• Schwab’s exposure to credit risk is limited: “We only lend to our clients and we only lend against their assets...We’re not seeing the indicators that would suggest this is a broad base credit issue yet.” – Rick Wurster (19:08)
• Conversation closes with Schwab’s golf culture and anecdotes about founder Chuck Schwab’s athletic achievements for a lighter touch. (22:01–24:22)

4. Ray Ban-Meta Smart Glasses Partnership Pays Off

(26:16–28:12)

• EssilorLuxottica (Ray Ban parent) reported an 11.7% jump in sales, driven in part by demand for their collaboration with Meta on smart glasses.
• Andrew Ross Sorkin offers personal insight: “It is a game changer. I’ve got a pair… You can record all kinds of stuff, hands free…the big thing is using it as a video camera.” (26:47–27:59)

5. Economic Sentiment – All America Economic Survey

(28:12–36:37)

• Steve Liesman delivers new polling data showing Americans’ outlook on the economy is increasingly negative:
  • President Trump’s overall approval dropped to 44%, with economic approval falling 3 points to 42%.
  • “It’s the economic approval that fell…to 42%. Disapproval rising…to 55%.” – Steve Liesman (29:23)
  • Only 24% are optimistic about the economy, while 57% are pessimistic (30:55).
  • Key pain points cited: jobs, inflation, cost of living, and tariffs.
• Liesman contends, “I see the economy as not that bad…that's not the case when you talk to average Americans. They're down on jobs and inflation and they really dislike these tariffs.” (32:14)
• Discussion includes assessments of the labor market’s hidden weaknesses and disparities in sentiment among income groups, as well as skepticism around the broader implications of polling results.

6. Washington Watch: U.S.–China Trade Talks

(37:31–40:57)

• Eamon Javers breaks news that Treasury Secretary Scott Bessant and China’s Vice Premier Huo Li Fang will speak by phone, signaling a potential thaw in tense trade negotiations (37:38).
• “We don’t know what the content of that call is going to be…but the fact of the call itself is notable…some kind of breakthrough could happen, or at least a platform where some kind of a breakthrough could happen.” – Eamon Javers (37:38–39:42)

Notable Quotes & Memorable Moments

• On Banking Stress: “The bankruptcies of two auto industry related companies this year have also raised concerns about loose lending practices, especially in the opaque private credit market.” – Joe Kernan (04:30)
• On Schwab’s Youth Surge: “Turns out Schwab is pretty hip…We're actually the most followed financial services company on YouTube…” – Rick Wurster (15:34)
• On Portfolio Concentration Risks: “The top 10 stocks in the S&P today are 38% of the index. That's more than double where it was 10 or 15 years ago.” – Rick Wurster (16:55)
• Personal Touch: “Chuck [Schwab] is doing really well. 88. He called me last week...He said, well, I just played a great round of golf...I beat my age by 13 shots.” – Rick Wurster (22:03)
• On Economic Sentiment: “It’s not just athletes, not all Americans…approval dropped to 44% from 46%. Disapproval rose 1 point…” – Steve Liesman (28:33)
• On Innovation: “It is a game changer. I’ve got a pair [of Ray Ban Meta smart glasses]…you can't really tell.” – Andrew Ross Sorkin (26:44)

Important Segment Timestamps

• Regional Bank Market Stress & Credit Issues – 01:04–10:42
• Leslie Picker: Breaking Down the Loan Exposure – 07:39–10:17
• Interview with Schwab CEO Rick Wurster – 12:31–22:35
• Ray Ban & Meta Smart Glasses Segment – 26:16–28:12
• CNBC/Steve Liesman Economic Sentiment Survey – 28:12–36:37
• Exclusive: U.S.–China Trade Call News – 37:31–40:57

Tone & Takeaways

• The hosts strike a balance between urgent concern (regional bank issues, economic outlook) and confident reassurance (Schwab’s exceptional results and steady client behavior).
• The mood is watchful: “It is of interest and it is of notice...but we hope it doesn’t boil into something bigger.” – Andrew Ross Sorkin (10:22)
• There’s a distinct CNBC flavor—fast-paced, data-driven, and pragmatic, with conversational banter breaking into finance-world humor and relatable life (golf, tech gadgets).
• The episode captures both market anxiety (about credit and politics) and the forward-looking optimism of innovation and adaptation in financial services.

Perfect episode for listeners seeking an up-to-the-minute scan of financial markets, banking health, investor behavior, and the intersection of politics, economics, and market technology.