Schwab Faces Fresh Risks in the Zero-Fee Landscape It Shaped

Charles Schwab Corp. stunned Wall Street in 2019 by slashing trading commissions to zero, forcing its competitors to adapt. The move amounted to a big bet that its bank — rather than its well-known discount brokerage — would keep driving profits.

For a while, it worked to perfection. The pandemic hit, interest rates were pinned near historic lows, and Schwab raked in billions as the fees it had forsaken were offset by what the company earned from its banking operation.

But last month’s collapse of three US banks, the industry’s worst crisis since 2008, has turned that wager on its ...