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How safe is your cash deposit in a levered bank vs. a money market fund holding treasuries as collateral? With Uncle Powell making it rain liquidity, I'd rathe
by anonuser123456 7y ago
How safe is your cash deposit in a levered bank vs. a money market fund holding treasuries as collateral? With Uncle Powell making it rain liquidity, I'd rather have it in the latter.
- toomuchtodo 7y agoAn FDIC insured savings account is the gold standard versus a money market fund, even with extraordinary Fed actions. Having lived through 2008, you do not want to need your money market funds and have withdrawals halted while someone waits for Fed liquidity because your fund broke $1 NAV.
- anonuser123456 7y agoFDIC limits end at 250,000. If your levered bank fails, that's all you get (maybe more if it's unwound and there are assets left ... but that can take a long time). With an MM fund you're holding treasuries as collateral, which the fed will buy immediately for cash.
- toomuchtodo 7y agoHow many non-institutional investors are keeping that much cash at a single institution? And if you're using a cash management account such that Fidelity has, their underlying banks are giving you $1.25M in FDIC coverage in aggregate. We're arguing different use cases.