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I know that 250k cash is not a lot for a company with a few folks on payroll. But why wouldn’t you distribute cash across multiple banks as a business? It hasn

I know that 250k cash is not a lot for a company with a few folks on payroll. But why wouldn’t you distribute cash across multiple banks as a business? It hasn’t to be this situation, but if your accounts are flagged for fraud or someone hacks an account, aren’t you safer by distributing cash in multiple banks?

kibwen 4y ago
People keep saying 250k, but it's actually 500k for any account with two signatories, which a company should be trivially able to produce.
TuringNYC 4y ago
>I know that 250k cash is not a lot for a company with a few folks on payroll. But why wouldn’t you distribute cash across multiple banks as a business? On the topic of FDIC insurance and startups... I'll put in a shameless plug for a startup I helped launch 20yrs ago: *Promontory Interfinancial Network" https://www.intrafi.com/solutions/depositors/ https://www.intrafi.com/solutions/depositors/ It was a startup them (now acquired), and created a bank deposit product "CDARS" which took customer deposits and distributed it across (k = N/<FDIC Limit) banks and kept the relationship as a single bank with a single account. Even cooler, as k other people did it at k other banks, the service would just swap deposits across all the banks. It was a super-cool and valuable product, and i'm proud to say I helped write the matching engine for it back in 2002. I realize this doesnt help startups with locked funds at SVB, but I'm pointing out -- there are options out there to have 100% FDIC insured safety for both individuals and startups.
dehrmann 4y ago
This workaround seems rather silly when it mostly applies to medium-sized businesses trying to get safe, stable bank accounts. FDIC coverage is too low for businesses.
- JohnFen 4y ago
  There are a number of mechanisms besides the FDIC that are commonly used for depositors of this scale. You can even buy your own insurance, if nothing else.
  - erik_seaberg 4y ago
    From whom? A search for "bank failure private insurance" kept talking about FDIC and sometimes SIPC.
    - JohnFen 4y ago
      CDARS is one system. A whole bunch of different systems have been mentioned scattered throughout these comments. But the bottom line is that if you really need to know what the options are, you really need to talk to a financial advisor with expertise in this level of business. They'll know what all the options are. This is a rather specialized and technical area of finance, and like most technical areas, I imagine it's hard to search for unless you know the magic terms and jargon to search for.
    - ashwagary 4y ago
      >From whom? Lloyds and AIG will insure just about anything, they'll happily protect $x million or billion for a nominal fee.
      - dehrmann 4y ago
        This isn't a viable solution; AIG almost went under in 2008.

kibwen 4y ago

People keep saying 250k, but it's actually 500k for any account with two signatories, which a company should be trivially able to produce.

TuringNYC 4y ago

>I know that 250k cash is not a lot for a company with a few folks on payroll. But why wouldn’t you distribute cash across multiple banks as a business? On the topic of FDIC insurance and startups... I'll put in a shameless plug for a startup I helped launch 20yrs ago: *Promontory Interfinancial Network" https://www.intrafi.com/solutions/depositors/ https://www.intrafi.com/solutions/depositors/ It was a startup them (now acquired), and created a bank deposit product "CDARS" which took customer deposits and distributed it across (k = N/<FDIC Limit) banks and kept the relationship as a single bank with a single account. Even cooler, as k other people did it at k other banks, the service would just swap deposits across all the banks. It was a super-cool and valuable product, and i'm proud to say I helped write the matching engine for it back in 2002. I realize this doesnt help startups with locked funds at SVB, but I'm pointing out -- there are options out there to have 100% FDIC insured safety for both individuals and startups.

dehrmann 4y ago

This workaround seems rather silly when it mostly applies to medium-sized businesses trying to get safe, stable bank accounts. FDIC coverage is too low for businesses.

JohnFen 4y ago
There are a number of mechanisms besides the FDIC that are commonly used for depositors of this scale. You can even buy your own insurance, if nothing else.
- erik_seaberg 4y ago
  From whom? A search for "bank failure private insurance" kept talking about FDIC and sometimes SIPC.
  - JohnFen 4y ago
    CDARS is one system. A whole bunch of different systems have been mentioned scattered throughout these comments. But the bottom line is that if you really need to know what the options are, you really need to talk to a financial advisor with expertise in this level of business. They'll know what all the options are. This is a rather specialized and technical area of finance, and like most technical areas, I imagine it's hard to search for unless you know the magic terms and jargon to search for.
  - ashwagary 4y ago
    >From whom? Lloyds and AIG will insure just about anything, they'll happily protect $x million or billion for a nominal fee.
    - dehrmann 4y ago
      This isn't a viable solution; AIG almost went under in 2008.