A credit default swap is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting.

This shows that Schwab is actually a well managed company and the ceo actually has a brain and can see there's a possibility of a credit default so he's essentially hedging beforehand to profit from the collapse.

But Schwab, like many other banks, has been losing deposits as rates have risen with people moving their cash to higher yielding accounts. Schwab had $366 billion in deposits at the end of 2022, down 17% from the end of 2021.

So Schwab holds $83.18B in cash and $37.88B Debt. So in the case of a bank run where will have to cover $366B deposits which they don't have. Schwab has $8.25B in HTM (Held to maturity) securities that are deep in the red that they can borrow off of.

Banks can borrow against their bonds since fed is backstopping everything so they will have a extra $8.25B + $83.18B cash so a total of $91.43B for withdraws. So they can cover 25% of their total deposits in the case of a bank run.

The required reserve ratio for banks is 0%. On March 15, 2020, the Federal Reserve set the reserve requirements for banks to zero. As of February 2, 2023, the reserve requirement for banks is still zero. As such, there is no requirement that banks have to keep any portion of customer deposits on hand.