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Comment by lovecg | Hacker News Reader

Any bank that tries that would have to charge a fee to cover costs and will quickly lose business to the other “banks” that don’t do that.

The fundamental lie here is allowing banks to tell you you have “cash” deposited and “available” with them. If the online app showed the truth - how your $10k you deposited turned into some shares in mortgage backed securities or whatnot, the alternative “just pay to park some cash” might be able to survive.

I have the same pet peeve about Amazon being able to tell you that you “buy” a Kindle book instead of buying a revocable license to read it temporarily.

It’s all false advertising really and it’s eroding competition and consumer trust.

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It’s not a lie.

Certainly for up to $250,000 deposited at an FDIC insured institution, it is absolutely true that you can assume that you have cash deposited and available. If at any time the bank gets itself into a position where they can’t make good on that, FDIC will fix it so you still have your cash.

That is precisely the mechanism that the federal Government makes available that gives you a place to park your cash.

As a note, this is one reason to still keep some paper checks around for your FDIC accounts.

Because when SVB closed on Friday and reopened on Monday, you could have still used a paper check during that time and it would be honored; but online access may have been shut off.

Does writing a check on a bank you know to be insolvent count as writing bad checks (which is a felony in some states)?

IANAL and it’s quite unclear to me.

I would think that it wouldn't be an issue, so long as your total for written checks that have not cleared is both not over your balance amount, and not over the FDIC $250k limit, but IANAL as well.

Ah, I hadn’t considered the FDIC insurance aspect. I was imagining writing checks that you had reason to believe weren’t worth anything.

> Any bank that tries that would have to charge a fee to cover costs and will quickly lose business to the other “banks” that don’t do that.

There is this saying that if you are not paying for it you are the product. Curious that people only apply it for search and email services.

>The fundamental lie here is allowing banks to tell you you have “cash” deposited and “available” with them. If the online app showed the truth - how your $10k you deposited turned into some shares in mortgage backed securities or whatnot, the alternative “just pay to park some cash” might be able to survive.

That's basically what bond mutual funds are (including money market mutual funds, which closely simulate savings accounts via $1 share price), and they seem to have a market.

The operations fee required for that company posited to have just raised its series A to park its fat stacks of cash is going to be negligible (as it should be constant for any size of account).

Well the other side of the equation is it would be very very tempting to do something with all that cash. Like “let’s fire the CEO who doesn’t go for it” tempting. I don’t see this working without regulation.

The problem for the startup is they are already doing something super risky and so want to be 100% conservative with the cash used to finance their operations. The last thing their investors want to hear is "so yeah, you wanted us to shoot for the moon with your money, but we didn't want to lose out on a couple percent of interest so we invested it in the market and that's down 20% right now so we're having to wait a bit to execute part of our strategy as we expect that to go back up soon".

Like, the problem is that the mental model of this money is wrong: there needs to be a place where a company that intends to take a bunch of money in and then spend it over the course of a few years can do that without it causing everyone a bunch of issues as those deposits were supposedly backing loans to still other people (such as that story with the hashicorp people that was posted here yesterday with the Chase bank branch that failed to understand that a startup's goal is to lose money, not invest it).

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