> “I’m like, Giannis, you can’t be having accounts at 50 different banks. Let me tell you something, if JPMorgan goes under, your little dinky banks are going to go under too."
but isn't that the point - *when* they go under, each dinky bank's $250k is 100% FDIC insured?
Plus 50 bank account signup bonuses
No doubt he was collecting on SUBs
The fact that the supposed financial advisor in the story doesn’t understand the FDIC (specifically the comment about the small banks going under if JPM goes under) really defeats their credibility.
It sounds like it was a quote from Lasry, which is confusing, why would he say that
To get the sale? It seems to have worked. Truth is orthogonal.
As I understand it, there are companies that basically do this as a service.
Yes, some financial institutions offer FDIC "sweep" accounts that automatically allocate cash deposits among accounts in multiple partner banks when the balance exceeds the maximum amount covered by the FDIC ($250,000 per account). Each partner bank can hold up to $250,000 of FDIC-insured deposits, allowing FDIC sweep accounts to claim FDIC insurance of greater than $250,000. Quite a few of these accounts offer $1.25 million or $2.5 million of FDIC coverage.
A big part of the current SVB coverage is that they had such a "sweep" service that split up customer deposits into smaller chunks and deposited them as securities at other banks, but it turns out those accounts were still in their own name rather than the customer's, and so people who used the service still can't access them.