The Institutional Risk Analyst

Many banks, led by the likes of Charles Schwab (SCHW) and Bank of America (BAC), refused to restructure their bond portfolios when interest rates were lower, leaving billions of dollars in potential earnings sitting on the table. As we discuss below, SCHW had a yield on its securities book, which is almost half of the group’s assets, of less than 2% at year-end 2025. Why is this OK?

Nations like Argentina and Turkey show the dangers of funding in dollars when you have a weak, small currency. Size matters. That is one big reason why the EU, China and Brazil have not been able to create an effective competitor to the dollar. Those remaining “AAA” sovereigns like Canada, Australia and Belgium have limited capital markets access. But if Americans manage to convince the rest of the world that we are indeed libertines and appropriate subjects for ridicule.

Dollars, Deficits and "Duh" in Davos