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When you give money to a bank, it's no longer yours. It's registered on the bank's books as its own asset, offset against a liability to pay the money back when

When you give money to a bank, it's no longer yours. It's registered on the bank's books as its own asset, offset against a liability to pay the money back when you ask for it. If the bank goes under, you're just another creditor.

JumpCrisscross 10y ago
> When you give money to a bank, it's no longer yours The cash is no longer yours, but the "money" certainly is. It's just taking the form of a demand deposit at a depository institution. We can quibble about the definition of "money". By the Federal Reserve's definition (and the bulk of international and American case law), bank deposits are your money [1]. Claims against money transmitters aren't even M2. > If the bank goes under, you're just another creditor If the bank goes under, you're a super-senior creditor partially or fully insured by the FDIC. PayPal, itself, isn't FDIC insured [2]. > if the bank suspects you're a human trafficker or a money launderer, they will freeze your money even if they can pay you back If a bank freezes your funds, you have regulatory recourse to ensure they're doing it per the law. If a money transmitter does this, you need to pay for your own lawyers and enforcement. [1] https://www.federalreserve.gov/faqs/money_12845.htm https://www.federalreserve.gov/faqs/money_12845.htm [2] http://money.howstuffworks.com/paypal7.htm http://money.howstuffworks.com/paypal7.htm
- KKKKkkkk1 10y ago
  PayPal doesn't need FDIC insurance because it's not in the money lending business. In fact, to my knowledge, PayPal had no trouble weathering the financial meltdown of 2007, whereas many regulated banks went under and had to be bailed out.
  - noway421 10y ago
    FDIC insurance is not only for financial meltdowns and saving customers money out of assets that deemed to be too risky. It would protect money if the whole PayPal would go down too. Which realistically probably wouldn't happen, but still insurance is insurance
  - edoceo 10y ago
    PayPal does offer business line of credit. I see the damn interstitial ad every sign in
    - Dylan16807 10y ago
      Is it definitely from PayPal? I have a credit line in the PayPal interface but it's actually from some other company.

JumpCrisscross 10y ago

> When you give money to a bank, it's no longer yours The cash is no longer yours, but the "money" certainly is. It's just taking the form of a demand deposit at a depository institution. We can quibble about the definition of "money". By the Federal Reserve's definition (and the bulk of international and American case law), bank deposits are your money [1]. Claims against money transmitters aren't even M2. > If the bank goes under, you're just another creditor If the bank goes under, you're a super-senior creditor partially or fully insured by the FDIC. PayPal, itself, isn't FDIC insured [2]. > if the bank suspects you're a human trafficker or a money launderer, they will freeze your money even if they can pay you back If a bank freezes your funds, you have regulatory recourse to ensure they're doing it per the law. If a money transmitter does this, you need to pay for your own lawyers and enforcement. [1] https://www.federalreserve.gov/faqs/money_12845.htm https://www.federalreserve.gov/faqs/money_12845.htm [2] http://money.howstuffworks.com/paypal7.htm http://money.howstuffworks.com/paypal7.htm

KKKKkkkk1 10y ago
PayPal doesn't need FDIC insurance because it's not in the money lending business. In fact, to my knowledge, PayPal had no trouble weathering the financial meltdown of 2007, whereas many regulated banks went under and had to be bailed out.
- noway421 10y ago
  FDIC insurance is not only for financial meltdowns and saving customers money out of assets that deemed to be too risky. It would protect money if the whole PayPal would go down too. Which realistically probably wouldn't happen, but still insurance is insurance
- edoceo 10y ago
  PayPal does offer business line of credit. I see the damn interstitial ad every sign in
  - Dylan16807 10y ago
    Is it definitely from PayPal? I have a credit line in the PayPal interface but it's actually from some other company.