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The term meaning varies by brokerage, but my implied meaning here is a service that distributes a large virtual account across a network of banks to keep the in
by chkaloon 4y ago
The term meaning varies by brokerage, but my implied meaning here is a service that distributes a large virtual account across a network of banks to keep the individual actual accounts below the insured limit. If this becomes the norm, even large accounts will become effectively insured.
They will pay a fee (or receive a lower return) for it for sure.
You could argue that this is a free market way to adjust from this event, but this was already available yet the failure still happened.
Making it explicit saves the system from future less savvy or inattentive depositors creating a mess again.
- deleted 4y ago[deleted]
- HWR_14 4y agoI don't see how this usage means that I will have to subsidize risks in the future. That usage implies the way to reduce exposure is literally for companies to spread their assets so any given bank run doesn't impact many of their assets. That is, they have to actually reduce their risk.
- chkaloon 4y agoBecause is increases dramatically the demand for FDIC insurance, which raises the fees on everyone.
- chkaloon 4y agoBased on the FDIC/Fed/Treasury actions this afternoon, they have effectively removed the $250K limit as a practical thing. If you have a deposit, you will be "bailed out", "backstopped", whatever. In their press release they said if they need extra funds to cover deposits, there will be a special assessment on all banks, passed on to you and me. So there you go.