When a federally insured bank makes bets, he notes, it exposes the government to gigantic losses.
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Start-ups and other financial companies can quickly create FDIC-insured bank accounts, move money online and do payment processing using BancBox.
Those averse to stock market risks, for instance, could have their money go into U.S. government bonds or government-insured bank certificates of deposit.
But if you have money in the safe instrument, a U.S. treasury bill or an FDIC - an FDIC-insured bank account, you're getting a very, very low return now.
If you wanted an investment that paid a return at virtually zero risk, you would buy an insured bank CD or put your money in a savings account.
Visa credit card and even owns an FDIC-insured bank.
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They are in almost all situations on the safe end of any scale that is not dominated by hollowed-out mattresses or federally insured bank accounts, and they belong in your portfolio.
Yes, MMFs gave only a low yield, yet even then it was superior to the yield one could get from a federally insured bank account, and it came with liquidity and a great reputation for safety.
The problem with this, argue some (including the Fed), is that only the Fed has broad powers to examine a bank's parent and its non-bank subsidiaries and act to stop problems elsewhere spreading to the insured bank.
From afar, it would be easy to underestimate how thoroughly depositors in Spain and Italy understand that they are inside the magic circle of "core Europe" and have nothing to fear from the Cyprus precedent, in which insured bank depositors might be asked partly to pay for their own bailout.
Its deposits are FDIC-insured against bank failures (not, of course, against currency losses).
That level represents the amount of savings that are supposed to be insured if a bank collapses.
Buyers of Treasurys and bank-insured CDs, for example, are now being enticed by dividend stocks, real estate investment trusts and master limited partnerships.
The goal is to separate the risky business of derivatives trading from the parts of a bank that take federally insured deposits and put an end to taxpayer bailouts of the financial industry.
Whether it is the 25-year-old freelancer with a pre-existing condition who can't purchase insurance in the individual market, the 20-year-old line cook who doesn't receive insurance through her job or the 28-year-old bank employee who is insured but is worried about the rising costs of premiums, young Americans experience the deficiencies of our health care system on a daily basis.
He adds that another big benefits of this sort of collectible is that, unlike art or wine, which can be very expensive to store and insure, the notes and documents that he does not keep at home can be stored in archival folders in a common bank safety deposit box and insured for pennies on the dollar.
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If deposits are insured, there is little incentive for a bank's customer to assess its creditworthiness and every incentive to take the highest rate on offer.
If you put cash in or a CD, as long as you keep it below a 100 grand for all your accounts at one bank, that is FDIC-insured.
Of course, if you're married and have multiple accounts in different categories at the same bank, each of those accounts is insured.
But, they claim, many of those accounts were not properly insured, leaving them with no recourse when the bank went belly-up last year.
Bank B is stuck with a big loss it thought it was insured against.
But the bank losses are a much bigger problem for investors than depositors whose money is typically insured by the federal government.
Because our savings are over-insured, we don't stop to consider the activities or the health of the institutions we bank with.
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