Major Wall Street firm advertises the gaming of FDIC insurance
=============
Conduct your personal banking through Wall Street Company X and benefit from the special incentives available to all Wall Street Company X U.S. employees.
BANK DEPOSIT PROGRAM – Increased Protection
Now you can safely consolidate greater cash holdings in Wall Street Company X’s Bank Deposit Program with increased protection. The Program utilizes two Wall Street Company X banks to double FDIC insurance coverage – single depositors are eligible for FDIC insurance equal to $500,000 and joint depositors are eligible for FDIC insurance equal to $1,000,000 in the Program. Additionally, there may be ways to increase this coverage based on account ownership. For example, a married couple can get up to $2,000,000 in FDIC coverage, as shown in the table below.
|
Accountholder
|
Deposit at Bank 1 |
Deposit at Bank 2 |
Total FDIC Insurance Coverage |
|
Joint Account
|
$500,000 |
$500,000 |
$1,000,000 |
|
Single Account |
$250,000
|
$250,000
|
$500,000 |
|
Single Account |
$250,000
|
$250,000 |
$500,000 |
|
Total Insured Deposits |
|
|
$2,000,000 |
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The bold “double FDIC insurance coverage” is in the original.
They note that the $250,000 is just temporary at the moment. Ending December 31st, 2009 unless extended by Congress.
This isn’t something that’s new. The wealthy do this all the time to get around the FDIC limits but to be so blatant about it was surprising to me. There are even companies which will perform this service for you. I’ve read of some people spreading out millions of US dollars across hundreds of banks.
The tomorrow’s wealthy taxpayer (remember the top 25% paid 85.99%) is picking up the bill right so why not?
Related posts:
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- FDIC broke, asking for unlimited Treasury loans
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- Fascism for the win: US government to own shares in major Wall Street companies
- Unsurprisingly some on Wall Street are not pleased with the failure of H.R. 3997
October 17th, 2008 at 4:12 pm
So the wrinkle here is that you go through ‘virtual’ bank A that simply splits your holding across ‘physical’ banks B, C, etc. to increase your FDIC limits? I suppose that’s technically legal and bank A is just charging you for the convenience of seeing the account as one account?
October 17th, 2008 at 5:17 pm
Yeah, pretty much. I don’t know if ‘virtual’ bank A actually hides the fact it’s in multiple accounts or just does it for you.
October 17th, 2008 at 7:13 pm
Don’t people usually not keep that much money in savings accounts?
October 17th, 2008 at 7:18 pm
demand deposit accounts too. If you need to pay bills you’re going to need it liquid.