The biggest banks in the world: Charles Schwab

Charles Schwab, an American multinational founded in San Francisco, California, in 1971, with a capitalization of $141.40 billion

by Lorenzo Ciotti
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The biggest banks in the world: Charles Schwab

Charles Schwab, an American multinational founded in San Francisco, California, in 1971, with a capitalization of $141.40 billion. The company operates mainly in the USA and in the United Kingdom, offering banking, investment, advisory and asset management services both with reference to a retail public and institutional clients.

Who is Charles Schwab

Charles Schwab is an American entrepreneur, founder and president of the Charles Schwab Corporation, a multinational financial services company. His firm became by far the largest discount securities dealer in the United States.

He semi-retired from the company in 2008 when he stepped down as CEO, but remains chairman and largest shareholder. As of January 2023, his net worth is estimated by Forbes at $11.9 billion, making him the 210th richest person in the world.

He attended pre-college school at Holy Rosary Academy in Woodland, California. Schwab graduated from Stanford University in 1959 with a degree in economics. In 1961 he received a Master of Business Administration from the Stanford Graduate School of Business.

In 1963 Schwab and three other partners launched Investment Indicator, an investment newsletter. At its peak, the newsletter had 3,000 subscribers, each paying $84 a year to subscribe. In April 1971, the firm incorporated in California as First Commander Corporation, a wholly owned subsidiary of Commander Industries, Inc., to offer traditional brokerage services and publish the Schwab investment newsletter.

In November of that year, Schwab and four others bought all the stock in Commander Industries, Inc. In 1972, Schwab himself bought all the stock in what was once Commander Industries. In 1973, First Commander changed its name to Charles Schwab & Co., Inc.

A turning point came in 1975, when the United States Securities and Exchange Commission deregulated the securities industry through the Securities Act Amendments of 1975, allowing companies like Schwab to charge whatever fees they wanted.

Schwab had long complained that established companies showed little concern for their customers' needs. Back then, securities weren't bought by consumers, they were sold by sellers, who earned commissions and higher profits by selling riskier securities regardless of possible downsides to consumers.

Schwab instituted a radically different set of policies. First, consumer spending has been cut in half. Second, sellers received hourly wages rather than commissions on the total sale price. He set up a nationwide toll-free order-taking number and later set up a 24/7 telephone system that would allow customers to place orders from anywhere at any time. Established companies were outraged by these innovations and sought to block Schwab's expansion.

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