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Seems like a marketing spin to lure customers into a false sense of security. From the fine print in the user agreement: "Cash in the Account is insured up to
by smoe 4y ago
Seems like a marketing spin to lure customers into a false sense of security. From the fine print in the user agreement:
"Cash in the Account is insured up to $250,000 per depositor by the FDIC in the event the Bank fails if specific insurance deposit requirements are met. FDIC insurance does not protect against the failure of Voyager or any Custodian (as defined below) or malfeasance by any Voyager or Custodian employee."
https://www.investvoyager.com/useragreement https://www.investvoyager.com/useragreement
- iancarroll 4y agoIf FDIC insurance is applicable, though, that should mean your cash is being held in your name with the underlying bank. It is unlikely that Voyager would have any right to those assets upon bankruptcy or insolvency -- if they do (I am no expert), that would destroy the neobank model to some extent. > Voyager maintains an agreement with the Bank whereby the Bank provides all services associated with the movement of and holding of USD in connection with the provision of each Account. Therefore, each Customer is a customer of the Bank. The "omnibus account" phrasing is a little vague though, but if FDIC insurance is applicable, funds have to be separated to some extent.
- smoe 4y agoI'm not an expert at all either, just mildly interested how this will play out. I don't have any money in it. There is an ongoing discussion about it on the Voyager subreddit https://www.reddit.com/r/Invest_Voyager/comments/vp8kdq/preparing_for_the_inevitable_fdic_claims/ https://www.reddit.com/r/Invest_Voyager/comments/vp8kdq/prep... Some people there say they have called the FDIC, but the response they have gotten is that the insurance only kicks in if the Metropolitan Commercial Bank fails. I have no idea what happens to the customer accounts at the bank in case of a Voyager bankruptcy. E.g. if they can be used to cover voyagers debt or have to be handed over to the customers.
- jcranmer 4y ago> I have no idea what happens to the customer accounts at the bank in case of a Voyager bankruptcy. E.g. if they can be used to cover voyagers debt or have to be handed over to the customers. Most likely, the customers are unsecured creditors to Voyager, which means they're at the back of line for getting claims on those assets.
- 323 4y agoBut how could then Voyager generate yield on funds locked into an underlying bank, more than what that bank offers on deposits?
- smoe 4y agoStatement from Metropolitan Commercial Bank "Metropolitan Commercial Bank maintains an omnibus account specifically designated for the benefit of Voyager customers. [...] Voyager is responsible for maintaining records to determine the ownership and amount of each of its customer’s funds on deposit in the omnibus account." https://www.mcbankny.com/fdic-coverage-available-to-voyager-customers/ https://www.mcbankny.com/fdic-coverage-available-to-voyager-... Unless I misunderstand, there seems to be no account separation whatsoever on the side of the bank and no "each Customer is a customer of the Bank"
- stusmall 4y agoThat's wild. That seems like something someone should go to jail for ignoring everything else. At a glance that wouldn't be my interpretation of the statement on their site.