Divide your cash across many accounts to keep it FDIC insured | Hacker News Reader

Divide your cash across many accounts to keep it FDIC insured

6 pointsrobomartin7 comments

This is a thing. Here's a service (no affiliation):

https://www.flourish.com/clients/cash

Scroll down to where it says "Keep your cash FDIC insured".

They will spread your funds across accounts and banks in order to stay within FDIC insured limits. You see a single virtual account. They handle the sausage making.

Brilliant.

View on HN

From now on, the FDIC will insure 100% of deposits because of what they did in the Silicon Valley Bank bailout. From now on, the customers of every bank that fails, along with members of Congress, etc., will pressure the FDIC because of the precedent that was created a week ago. Some argue that it’s a dangerous precedent, and they’re not wrong.

SVB catered to business customers, so the FDIC essentially bailed out businesses. If a regular bank failed with your average-joe customers, I'll wager FDIC won't do anything.

It's always when the rich get screwed, rules get bent. I'll be curious to see when a bank for retail customers get screwed, but I hope it never happens.

SVB had 3% insured deposits whereas the average large regional bank (50-500 billion) is 57% insured. So I suspect if you're a customer at a regional bank in flyover country, you're not important.

Given payroll and other immediate cash needs, there should probably always have been separate depositor insurance for corporations. In retrospect commingling insurance, and insurance fees, for business and retail accounts seems like a bad idea. It would be really rare that an individual needs the immediate cash flow of a business (and if they do they can split it among multiple accounts), so the risk of not insuring more than $250k for a retail account is much lower than the same risk for a business account (for which multiple accounts would cause more problems than for individuals).

Why is it dangerous to ensure that money in the bank is safe? Is it dangerous to guarantee all contacts are valid for their entire term in a court of law too or should we limit them to only being valid for the first 3 months, for example?

> it’s a dangerous precedent

It’s dangerous if unbalanced. Mid-sized banks need more monitoring. And the FDIC needs new assessments on deposits over $250k (I’d argue for three tiers: $3mm, $25mm and $100mm) as well as explicit mutualisation obligations.

Why not just keep your money in a brokerage account instead of a cash savings.

Reply on news.ycombinator.com