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Is a startup that having one banking partner "cheating the system"?

• swatcoder 4y ago
  If the startup was advised to do that by a VC who believed the government would come in and rescue uninsured deposits, then yes. And they should take up their frustration with that VC, not the rest of us. Because banks use deposits to fund investments, deposits have a risk of loss. That’s why there’s insurance available for them. Businesses and wealthy individuals have been navigating their way through this risk for a long time. The need to do so is not rarified knowledge and the means are not secret.
• wpietri 4y ago
  No, but expecting their uninsured deposits to be retroactively insured is. Imagine some homeowner called up Allstate saying, "Hey, my house burned down last week, can I get that covered even though I don't have insurance?" We'd laugh at them. I get that it sucks for them, and they're going to have some Kubler-Ross time ahead. But that doesn't mean that somebody else should bail them out.
  • bombcar 4y ago
    Health insurance now works basically that way. And some other forms let you actually “come current” before a claim, but it varies.
    • wpietri 4y ago
      Is there a health insurance provider that will cover past costs? I've never heard of one. They do of course cover future costs of existing illnesses, but that's thanks to a fair bit of special lawmaking and cost-sharing mechanisms. Neither of which exist for homeowner insurance. Or bank failure, for that matter.
      • lazide 4y ago
        COBRA is retroactive.
        • SoftTalker 4y ago
          Yeah but you have to pay the premiums retroactively also.
          • lazide 4y ago
            But you can decide to do so only after you have a reason to do so. Which is the retroactive part.
      • bombcar 4y ago
        As mentioned COBRA is actually retroactive but even normal insurance can be bought after a diagnosis and before a treatment. Which would be like buying fire insurance after calling 911 but before the trucks arrive.
    • FireBeyond 4y ago
      Health insurance is really only insurance in name only. In between deductibles, and then copays, and then coinsurance, denials for all sorts of things, health insurance is really just amortized payments + cost negotiations.