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I asked this too late on the last SVB thread: I have a naive question. When I was a little kid and the FDIC only insured the first $100,000, I thought, "If I w

by jbaber 4y ago

I asked this too late on the last SVB thread: I have a naive question. When I was a little kid and the FDIC only insured the first $100,000, I thought, "If I were rich, I'd have to have multiple bank accounts." Do big companies not do this with their liquid assets as a matter of course? Are there just not enough banks? Or would per-account fees unknown to me as a little guy eat into savings? I get that big companies directly hold a bunch of bonds, too. But if they use a bank so they can actually write checks, why not many banks?

strgcmc 4y ago
This is actually a niche industry, that provides "deposit solutions". A family member used to work at this one for example, who just put a PR release based on the recent news cycle: https://www.reichandtang.com/2023/03/12/statement-on-protecting-deposits-2/ https://www.reichandtang.com/2023/03/12/statement-on-protect... They provide up to $50 million worth of combined coverage, by splitting across dozens of partner banks into $250k chunks. Yes there are fees associated with purchasing such a service, but I'm not really sure why it's not more popular or more commonly adopted as SOP for small to medium enterprises to do this. Maybe there is a convenience or liquidity factor that I'm missing, or maybe people really didn't think the cost was worth it (but I'd guess many are probably reevaluating now, just how safe or unlikely they think a bank failure really is)?