4 ms·

You can buy insurance to protect amounts above $250k.

AH4oFVbPT4f8 4y ago
Exactly this, take out insurance, open additional accounts so that the companies livelihood is not dependent on a single bank. What about all the companies who funded all these 'companies' ? Why aren't they stepping in to clean up the mess?
avalys 4y ago
And who ensures that the insurance company has enough capital to pay out on that insurance?
- deleted 4y ago
  [deleted]
consumer451 4y ago
I had no idea that was an option. My google-fu is failing me, what is that called? Who are the providers? Seems like it would be a mega capital intensive insurance product. edit: this is way out of my wheelhouse, so an actual answer would be educational.
- Kortaggio 4y ago
  The term to google for is "insured cash sweep", but the specifics depend on the particular financial institution you work with. Instead of a single insurance provider, your cash is sharded behind the scenes among many member institutions. Here's one bank I picked at random from Google[0]. Brokerages like Schwab[1] and IBKR[2] also have a private insurer (both use Lloyd's of London) they offer as a service to customers. [0] https://www.stearnsbank.com/personal/high-balance-deposit https://www.stearnsbank.com/personal/high-balance-deposit [1] https://www.schwab.com/legal/sipc-account-protection https://www.schwab.com/legal/sipc-account-protection [2] https://ibkr.info/node/2012 https://ibkr.info/node/2012
  - consumer451 4y ago
    Thanks for pointing me to this!
- spiralx 4y ago
  Try searching for "reinsurance" as in insurance for insurance, Swiss Re and Lloyds of London are the two big names I can think of, I don't know much other than that.
ummonk 4y ago
That just moves the source of risk to the company selling you that insurance. If they go under as well, then that insurance is worthless.
tomp 4y ago
Which insurance company can pay out a $40bn risk event?
- denton-scratch 4y ago
  Lloyds of London?
- trogdor 4y ago
  When Lehman Brothers collapsed, the associated insurance payouts totaled ~$100 billion.
- joshuamorton 4y ago
  Reinsurance literally exists for this purpose. It's what Berkshire Hathaway does, for example.
  - anticensor 4y ago
    You can only reinsure so many times before you arrive in the central bank.
- christophilus 4y ago
  Berkshire Hathaway could. They probably wouldn’t have insured SVB, though.

Exactly this, take out insurance, open additional accounts so that the companies livelihood is not dependent on a single bank. What about all the companies who funded all these 'companies' ? Why aren't they stepping in to clean up the mess?

avalys 4y ago

And who ensures that the insurance company has enough capital to pay out on that insurance?

deleted 4y ago
[deleted]

consumer451 4y ago

I had no idea that was an option. My google-fu is failing me, what is that called? Who are the providers? Seems like it would be a mega capital intensive insurance product. edit: this is way out of my wheelhouse, so an actual answer would be educational.

Kortaggio 4y ago
The term to google for is "insured cash sweep", but the specifics depend on the particular financial institution you work with. Instead of a single insurance provider, your cash is sharded behind the scenes among many member institutions. Here's one bank I picked at random from Google[0]. Brokerages like Schwab[1] and IBKR[2] also have a private insurer (both use Lloyd's of London) they offer as a service to customers. [0] https://www.stearnsbank.com/personal/high-balance-deposit https://www.stearnsbank.com/personal/high-balance-deposit [1] https://www.schwab.com/legal/sipc-account-protection https://www.schwab.com/legal/sipc-account-protection [2] https://ibkr.info/node/2012 https://ibkr.info/node/2012
- consumer451 4y ago
  Thanks for pointing me to this!
spiralx 4y ago
Try searching for "reinsurance" as in insurance for insurance, Swiss Re and Lloyds of London are the two big names I can think of, I don't know much other than that.

ummonk 4y ago

That just moves the source of risk to the company selling you that insurance. If they go under as well, then that insurance is worthless.

tomp 4y ago

Which insurance company can pay out a $40bn risk event?

denton-scratch 4y ago
Lloyds of London?
trogdor 4y ago
When Lehman Brothers collapsed, the associated insurance payouts totaled ~$100 billion.
joshuamorton 4y ago
Reinsurance literally exists for this purpose. It's what Berkshire Hathaway does, for example.
- anticensor 4y ago
  You can only reinsure so many times before you arrive in the central bank.
christophilus 4y ago
Berkshire Hathaway could. They probably wouldn’t have insured SVB, though.