Charles Schwab CEO Walter Bettinger held the Federal Reserve responsible for the company’s most recent layoffs.
“When the Federal Reserve made the decision to reduce rates from a trajectory entering this year we thought rates would be going up, we just had too many people and too much expense relative to the revenue that our clients were generating,” Bettinger told CNBC’s Sharon Epperson on Tuesday.
In September, Schwab laid off 600 of its employees in San Francisco, which is about 3% of its total workforce. A Schwab spokesperson told the Wall Street Journal the layoffs were to ensure Schwab remains “well-positioned to serve clients while navigating an increasingly challenging economic environment.”
The Federal Reserve has lowered interest rates three times this year in order to combat slowing economic growth. The most recent rate cut was last week. Lower short-term interest rates hit the bottom lines of electronic brokers directly by lowering the rates they can charge for managing customers’ day-to-day cash.
“There’s really nothing that I’m involved in and have to sign off on that is more difficult than the decision on layoffs,” said Bettinger. “In no way is it as difficult as the people that are actually impacted by that.”
Schwab, which holds about $3.72 trillion in client assets, has grown its workforce in recent years, doubling it to over 20,000 employees, Bettinger noted.
Bettinger said he believes the layoffs are a thing of the past. “We don’t anticipate having to revisit that in the near term,” he added.
Federal Reserve Chair Jerome Powell signaled last week the Fed would not be lowering rates again without deteriorating data.
Last month, Schwab ended all commissions for online trading in U.S. stocks, exchange-traded funds and options. The company also started offering fractional trading, where clients can by part of a share of a stock.
Bettinger said this is an effort to attract newer, younger and smaller investors.