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So essentially what you're saying is people should open a new account for every $250k they have, so their money is insured. Insane that this is something that p

So essentially what you're saying is people should open a new account for every $250k they have, so their money is insured. Insane that this is something that people now need to worry about.

baq 4y ago
This was always true.
tlamponi 4y ago
> So essentially what you're saying is people should open a new account for every $250k they have OP mentioned that there might be a service for that, and potentially also insurance that you can take out yourself for higher amounts. > Insane that this is something that people now need to worry about. Always has been, that is if you were just somewhat risk averse - more than one (unrelated!) bank account has always made sense. FWIW, here in the EU we're only covered until 100k €, so 2.5 times as many banks required to spread safely ;-P But, a lot of people do not need to have the cash around all the time, so one can but a big amount into relatively safe securities like S&P500 or for lower risk, which might be preferred here, gov bonds, and keep only the cash on hand for a few months of your expenses, which means most of the time two banks are enough, and having an account on two unrelated banks makes sense anyway - as if one has a bank run or fails completely you have still access to the cash on the other, for short-term things. For companies this can work too, but they need a constant revenue stream matching their normal monthly expenses (e.g., salaries, office rents, ...) for it to work best.
deleted 4y ago
[deleted]
CPLX 4y ago
Nearly every bank that does reasonable amounts of commercial services has a product that just does this for you. Googling FDIC sweep account will yield plenty of examples. There are also ones that will hold T bills or similar as well. It’s abstracted away from you and trivial to do. These startups just didn’t do it.
roundandround 4y ago
I find it kind of insane to have people walking around with a 100 million bank account for their runway in the best cheese grater. Call me crazy but I think a company with this much financial holdings would normally have a CFO that buys bonds that vest at the right times, and would have cried a tiny tear at getting less than ideal interest rates on them instead of having a bank collapse with all their finances because it wouldn't be competitive at recruiting more clients with zero financial management going forward. Perhaps decades of no inflation and low interest expectations have left people confused to the fact that when you have millions you are an investment holding company.
morelisp 4y ago
You don't need to spread it out so each account is < $250k, you need to spread it out enough so you can still make payroll if one fails while you wait for its assets to be sorted out. In most cases for a startup this means two, maybe three if you suspect your two might be correlated; at some point you start buying your own bonds/bills too.
exegete 4y ago
Even if you have all your money spread across different accounts (of the same category) at the same bank they all contribute to the $250k limit. It needs to be spread across account categories and banks.
- Kye 4y ago
  The FDIC has a resource on this that goes into more detail. https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/ https://www.fdic.gov/resources/deposit-insurance/brochures/i... For this in particular: >> "The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank. For example, if a person has a certificate of deposit at Bank A and has a certificate of deposit at Bank B, the amounts would each be insured separately up to $250,000. Funds deposited in separate branches of the same insured bank are not separately insured."
bruce343434 4y ago
Basically what people are saying is that these "CFO"s have/had a skill issue

So essentially what you're saying is people should open a new account for every $250k they have, so their money is insured. Insane that this is something that people now need to worry about.

baq 4y ago

This was always true.

tlamponi 4y ago

> So essentially what you're saying is people should open a new account for every $250k they have OP mentioned that there might be a service for that, and potentially also insurance that you can take out yourself for higher amounts. > Insane that this is something that people now need to worry about. Always has been, that is if you were just somewhat risk averse - more than one (unrelated!) bank account has always made sense. FWIW, here in the EU we're only covered until 100k €, so 2.5 times as many banks required to spread safely ;-P But, a lot of people do not need to have the cash around all the time, so one can but a big amount into relatively safe securities like S&P500 or for lower risk, which might be preferred here, gov bonds, and keep only the cash on hand for a few months of your expenses, which means most of the time two banks are enough, and having an account on two unrelated banks makes sense anyway - as if one has a bank run or fails completely you have still access to the cash on the other, for short-term things. For companies this can work too, but they need a constant revenue stream matching their normal monthly expenses (e.g., salaries, office rents, ...) for it to work best.

deleted 4y ago

[deleted]

CPLX 4y ago

Nearly every bank that does reasonable amounts of commercial services has a product that just does this for you. Googling FDIC sweep account will yield plenty of examples. There are also ones that will hold T bills or similar as well. It’s abstracted away from you and trivial to do. These startups just didn’t do it.

roundandround 4y ago

I find it kind of insane to have people walking around with a 100 million bank account for their runway in the best cheese grater. Call me crazy but I think a company with this much financial holdings would normally have a CFO that buys bonds that vest at the right times, and would have cried a tiny tear at getting less than ideal interest rates on them instead of having a bank collapse with all their finances because it wouldn't be competitive at recruiting more clients with zero financial management going forward. Perhaps decades of no inflation and low interest expectations have left people confused to the fact that when you have millions you are an investment holding company.

morelisp 4y ago

You don't need to spread it out so each account is < $250k, you need to spread it out enough so you can still make payroll if one fails while you wait for its assets to be sorted out. In most cases for a startup this means two, maybe three if you suspect your two might be correlated; at some point you start buying your own bonds/bills too.

exegete 4y ago

Even if you have all your money spread across different accounts (of the same category) at the same bank they all contribute to the $250k limit. It needs to be spread across account categories and banks.

Kye 4y ago
The FDIC has a resource on this that goes into more detail. https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/ https://www.fdic.gov/resources/deposit-insurance/brochures/i... For this in particular: >> "The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank. For example, if a person has a certificate of deposit at Bank A and has a certificate of deposit at Bank B, the amounts would each be insured separately up to $250,000. Funds deposited in separate branches of the same insured bank are not separately insured."

bruce343434 4y ago

Basically what people are saying is that these "CFO"s have/had a skill issue