9 ms·

excuse my ignorance but what is the magical ampersand? edit: Doh.. I guess I just got caught commenting without reading the article. Sorry everybody!

MBCook 8y ago
It’s mentioned in the article, the author appears to have coined it for the original story. “Checking” accounts are regulated. “Savings” accounts are regulated. “Checking & Savings” accounts are not a thing and thus could be considered a grey area. The ampersand magically gets you out of regulation. Well, it DIDN’T, but that was the theory it seems.
- morpheuskafka 8y ago
  I don't think they ever tested that--the issue was with SPIC saying they would not protect the accounts, not with the banking authorities saying the name was misleading.
XCabbage 8y ago
It's in the article. Use CTRL-F.
_hardwaregeek 8y ago
According to the article: > Robinhood can’t issue a “checking account,” or a “savings account,” since those are things only banks can do, but “checking & savings” is technically neither of those things and so perhaps it falls into a gray area. “A magic ampersand,” I called it.
mattnewton 8y ago
Matt Levine opined (tongue in cheek, as is his usual style) that Robinhood may have thought that “Robinhood Checking & savings” was distinguishable from a checking and savings bank account and so could be regulated differently because of the ampersand, in a previous “money stuff” “”” There is a lot of confusion about what Robinhood’s thing is. Delightfully, it is called “Robinhood Checking & Savings,” apparently because calling it a “checking account” or a “savings account” would come too close to implying that it is a real bank account insured by the Federal Deposit Insurance Corp., while “checking & savings” is not a thing and so does not carry that implication. A magic ampersand! “”” https://www.bloomberg.com/opinion/articles/2018-12-14/nyse-needed-some-pretend-traders https://www.bloomberg.com/opinion/articles/2018-12-14/nyse-n...
- jl2718 8y ago
  Lots of brokerages have money market accounts that pay interest, allow checking and debit cards, and are SIPC-protected. What makes this different? The name? The rate? The challenge to incumbents? Seems Like the salty response of regulatory capture.
  - ineedasername 8y ago
    According to the president of SIPC, it's that they were marketing it as sonething that required no investment. As such, it's not in line with what SIPC covers. As for money market, it might look similar to a money market account, but it isn't one, so it's not covered by FDIC either (money markets are)
    - plewis_ 8y ago
      Money markets are not covered by the FDIC or NCUA. [1] During the financial crisis, the Reserve Primary Fund "broke the buck" and lost principal for investors. [2] [1] https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-915/ https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-mar... [2] https://en.wikipedia.org/wiki/Reserve_Primary_Fund https://en.wikipedia.org/wiki/Reserve_Primary_Fund
      - ineedasername 8y ago
        Nearly the very first line in your first link states they are covered by FDIC or NCUA, depending on whether it's a bank or credit union: Like a regular savings account, a money market account at a bank is insured by the Federal Deposit Insurance Corporation (FDIC)... Where they are not insured is in a Brokerage firm, like Robinhood.
        barbecue_sauce 8y ago
        Weren't they partnering with Sutton Bank for the debit offering? I assumed that my money would actually be held by Sutton, similar to how my Fidelity cash management account is held in an actual bank that is not branded as Fidelity (which leads to some confusion when doing transfers).
deleted 8y ago
[deleted]

MBCook 8y ago

It’s mentioned in the article, the author appears to have coined it for the original story. “Checking” accounts are regulated. “Savings” accounts are regulated. “Checking & Savings” accounts are not a thing and thus could be considered a grey area. The ampersand magically gets you out of regulation. Well, it DIDN’T, but that was the theory it seems.

morpheuskafka 8y ago
I don't think they ever tested that--the issue was with SPIC saying they would not protect the accounts, not with the banking authorities saying the name was misleading.

XCabbage 8y ago

It's in the article. Use CTRL-F.

_hardwaregeek 8y ago

According to the article: > Robinhood can’t issue a “checking account,” or a “savings account,” since those are things only banks can do, but “checking & savings” is technically neither of those things and so perhaps it falls into a gray area. “A magic ampersand,” I called it.

mattnewton 8y ago

Matt Levine opined (tongue in cheek, as is his usual style) that Robinhood may have thought that “Robinhood Checking & savings” was distinguishable from a checking and savings bank account and so could be regulated differently because of the ampersand, in a previous “money stuff” “”” There is a lot of confusion about what Robinhood’s thing is. Delightfully, it is called “Robinhood Checking & Savings,” apparently because calling it a “checking account” or a “savings account” would come too close to implying that it is a real bank account insured by the Federal Deposit Insurance Corp., while “checking & savings” is not a thing and so does not carry that implication. A magic ampersand! “”” https://www.bloomberg.com/opinion/articles/2018-12-14/nyse-needed-some-pretend-traders https://www.bloomberg.com/opinion/articles/2018-12-14/nyse-n...

jl2718 8y ago
Lots of brokerages have money market accounts that pay interest, allow checking and debit cards, and are SIPC-protected. What makes this different? The name? The rate? The challenge to incumbents? Seems Like the salty response of regulatory capture.
- ineedasername 8y ago
  According to the president of SIPC, it's that they were marketing it as sonething that required no investment. As such, it's not in line with what SIPC covers. As for money market, it might look similar to a money market account, but it isn't one, so it's not covered by FDIC either (money markets are)
  - plewis_ 8y ago
    Money markets are not covered by the FDIC or NCUA. [1] During the financial crisis, the Reserve Primary Fund "broke the buck" and lost principal for investors. [2] [1] https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-915/ https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-mar... [2] https://en.wikipedia.org/wiki/Reserve_Primary_Fund https://en.wikipedia.org/wiki/Reserve_Primary_Fund
    - ineedasername 8y ago
      Nearly the very first line in your first link states they are covered by FDIC or NCUA, depending on whether it's a bank or credit union: Like a regular savings account, a money market account at a bank is insured by the Federal Deposit Insurance Corporation (FDIC)... Where they are not insured is in a Brokerage firm, like Robinhood.
      - barbecue_sauce 8y ago
        Weren't they partnering with Sutton Bank for the debit offering? I assumed that my money would actually be held by Sutton, similar to how my Fidelity cash management account is held in an actual bank that is not branded as Fidelity (which leads to some confusion when doing transfers).

deleted 8y ago

[deleted]