The FDIC insurance of $250,000 is by the government in case the bank becomes insolvent. The FDIC can easily cover $650 MM in a single bank that has 3,000+ customers. Or really even fewer than that with multiple account types.
But even then, if you store $650 MM in a Bank of America account, that money is protected against being stolen by BOA's anti-fraud software, laws, the trillions of dollars of assets BOA has.
This isn't a single user, FDIC insurance is for $250k per user per bank. The point is that for regulated banks that number is clear and if you exceed it you will be aware of it, and if you haven't exceeded it you have a federal guarantee to recover your money. What assurance does anyone have in this case?
It protects again bank failure. If the one's assets are drained from the bank, as long as the bank has not failed, it will have to make the account holder whole.
That's why a company would be stupid to hold $200M at Podunk Bank of Littletown, KS but is perfectly fine to hold it in a DDA account at Bank of America, Citi or Chase
HWR_14|3 years ago
But even then, if you store $650 MM in a Bank of America account, that money is protected against being stolen by BOA's anti-fraud software, laws, the trillions of dollars of assets BOA has.
granzymes|3 years ago
icelancer|3 years ago
Thrymr|3 years ago
notyourday|3 years ago
It protects again bank failure. If the one's assets are drained from the bank, as long as the bank has not failed, it will have to make the account holder whole.
That's why a company would be stupid to hold $200M at Podunk Bank of Littletown, KS but is perfectly fine to hold it in a DDA account at Bank of America, Citi or Chase