$2.62 trillion in US bank deposits are uninsured by FDIC

Tyler_JC

There are a lot of people with more than $100,000 in a single bank account.

We haven't raised that number since the 1980s and thanks to inflation, it's becoming increasingly common for upper middle class people to have that much cash.

They should have indexed the insurance level to inflation.

Take Bill Gates for an extreme example. He has at least 10 billion in cash (give or take a few billioni).

That means he would need to find 100,000 separate banks in order to deposit all of that money safely.

Unfortunately we don't have anywhere near that many banks. As a a result, most of his money is uninsured.
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Kingcoal

You mean poor old Bill Gates might lose some money?
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Serial_Worrier · Heavy Crude Joined: Jun 05, 2008 Posts: 285

Tyler_JC

qwanta · Heavy Crude Joined: Mar 08, 2005 Posts: 111

hope_full · Heavy Crude Joined: May 27, 2008 Posts: 271

I don't think it's any big surprise that so much money is NOT protected by FDIC. It was intended to protect Mom and Pop Savers from the unexpected collapse of their friendly neighborhood savings and loan. It was never engineered to protect 300 million citizens from system-wide failure and the end of civilization.

I don't like the headline because it's nonsensical. Did anyone really believe that every dollar in every bank is protected by the federal government?

idiom

Slightly before the crash, Something like 3 million Americans had net assets over 1 Million Dollars excluding their primary residence.

Also, of the money that is insured, it is not all insured at the same time. The first 50 billion or so gets covered and eveyone else is then uninsured. I think.

MrBill · Expert Joined: Sep 15, 2005 Posts: 5650 Location: Eurasia

I would assume the majority of the uninsured money belongs to corporations and not individuals. Corporations should have counterpart limits in place where they limit the amount of funds per institution based on their credit rating. This protects them from individual bank failures. In the case of a systemic bank failure then the Fed is the lender of last resort in any case.

Individuals are covered up to $100.000 per account per bank if I understand correctly. Therefore, if they have more they can keep it with more than one bank. Money market instruments bought from the bank are not part of the bank's own capital. Those funds are segregated and subject to different treatment.

Segregated brokerage accounts are covered by another insurance scheme that licensed brokers are compelled to pay into. Again those accounts are not part of the broker's own capital and belong to the client in case of bankruptcy. In the case of a shortfall the insurance scheme pays up. If it is empty then likely the taxpayer.

If there is a systemic failure and $2.62 trillion suddenly disappears then likely your $100.000 is not worth squat in any case.
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IslandCrow

And over here in Finland my protection is only for € 25 000 (currently about US$ 40 000)!

Although the way the dollar is tanking I might soon have the same protection as in the States. Twisted Evil

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Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6286

Seeing as the Feds couldnt pay out on the insured amounts anyways I 'm not really concerned about the "uninsured" amount.
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Pretorian

What kind of bank are those, with 12mln in deposits and 14 in assets? Piggy banks?