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See, for example, Fidelity's FDIC-Insured Deposit Sweep Program. https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBankList https://accountopening.fid
by astura 4y ago
See, for example, Fidelity's FDIC-Insured Deposit Sweep Program.
https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBankList https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...
>To provide you with the benefit of FDIC insurance eligibility, the cash balance in your account will be automatically swept into an interest-bearing FDIC-Insured Deposit Sweep position. Since FDIC insurance coverage is currently limited to $250,000 per qualified customer account per banking institution, Fidelity may use several banks, rather than just one, to maximize your FDIC coverage.
- bee_rider 4y agoInteresting. So is the coverage cap actually accomplishing much?
- freeone3000 4y agoIt spreads risk throughout the system. In a maximally-resilient scenario, everyone would have a small deposit at every possible bank -- then when any bank fails, it's "no big deal", and you won't panic and withdraw your money from the rest. This is similar -- any particular failure is going to be for half (or less!) of your money, instead of all of it, reducing the urgency and spreading out the risk.
- bee_rider 4y agoAh, that’s interesting. So spreading the accounts across multiple banks is essentially accomplishing the goal of the program.
- SOLAR_FIELDS 4y agoMercury has a been taking this idea to a pretty logical extreme lately. At first it was just $1M, but it’s now $5M https://mercury.com/blog/company-news/understanding-bank-sweep-network https://mercury.com/blog/company-news/understanding-bank-swe...