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Comment by koolba | Hacker News Reader

> The FDIC said the payments would not begin until the second quarter of 2024 and would be collected over two years, translating to an annual rate of 0.125 per cent of each bank’s uninsured deposits.

This is going to be a fun one to track. I fully predict the big banks will game their own deposit holdings to not fall into this category. A year is plenty of time for them to find some loophole.

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There doesn't seem to be much that they can do to game it as the calculations seem to be based on uninsured deposits. The bank doesn't control how much a depositor places in the bank.

> The bank doesn't control how much a depositor places in the bank.

Ha! Of course they do.

All it takes is a letter or phone call advertising a new cash management account that holds overnight treasuries. Customers can sign up and move their $250K+ deposits (which technically aren’t insured anyway) to that non-deposit account.

Not every bank is going to be able to leverage a CMA that works the additional FDIC insurance. And even then, offering incentives or products does not mean a depositor will actually utilize them.

They can easily set up accounts so that they earn lower (or no) interest over $250k, or do what Apple is doing with Apple Card savings and not even allow balances over $250k. Then the bank is effectively passing on the fee to only those unwise enough to keep more than $250k in a account.

Sure, but FDIC insurance is per depositor, per insurable account category, per institution. Someone with three different savings accounts at the same institution each with less than $250k individually but more than $250k total still only gets $250k in insurance.

EDIT: I'm not saying the system can't, for a lack of a better word, be gamed, but ultimately that requires action on the depositors end, not necessarily the bank(s).

EDIT 2: Which means that any balance over that 250k in the same category would, in theory, count towards an institution's uninsured deposit balance.

If bank reduce interest rates above $250k, it gives incentive for the depositor to use multiple banks. There could also be startups that automatically distribute deposit >$250k to 1000s of bank automatically.

Haven't read the article, but I wouldn't be surprised if it is taken as a percentage of the bank's uninsured deposits specifically to encourage banks to have less uninsured deposits, strengthening the resiliency of the banking system...

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