The most important items in his letter:
- Schwab brokerage asssets are held separately from the company's asssets and are covered by SIPC or Securities Investor Protection Corporation.
- Schwab Bank deposits are FDIC-insured.
Here is some info on SIPC from Wikipedia.
The Securities Investor Protection Corporation (SIPC) is a federally mandated non-profit corporation in the United States that protects securities investors from harm if a broker/dealer defaults. Investors are not insured for any potential loss while invested in the market.
SIPC was created by the 1970 Securities Investor Protection Act, 15 U.S.C. § 78aaa et seq, but it is not a government agency; rather, it is a membership corporation funded by its members.
SIPC serves two primary roles in the event that a broker-dealer fails. First, SIPC acts to organize the distribution of customer cash and securities to investors. Second, to the extent a customer's cash and/or securities are unavailable, SIPC provides insurance coverage up to $500,000 of the customer's net equity balance including up to $100,000 in cash.