Fact is, Schwab has no legitimate reason for closing accounts that use Schwab to cash out MR points. Schwab has a long list of terms and rules and policies, and nowhere does it state that using one of its features, like the cashout of MRs, is grounds for terminating an account. The banks and brokerages simply act this way, illegally and unfairly, because they can and no one ever stops them from doing so. Recognize that they can do any damn thing they want, without reason and without recourse--but don't accept it and excuse that behavior as legitimate in some way.
Are you a top lawyer to state the above? What if someone stole millions of MR points, cash out for $10,000, then quickly transfer the money out? It is clearly a money laundering risk.
I do not think it is un-profit customer issue. It is more a compliance issue and related risk. The bank can be fined for any possible illegal activities. But shutting down account is not one of them. I would have done the same if I ran the bank.