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Am I at risk if a bank run actually happened?


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2020 Nov 14, 3:28pm   1,277 views  14 comments

by rocketjoe79   ➕follow (0)   💰tip   ignore  

I have personal Capital managing my IRA. They have all the funds deposited with BNY Mellon. Am I at risk if there was a bank run and wanted to pull out all my funds?

Likewise, I don't expect BNY Mellon to fail, but aren't I only FDIC insured for $250K?

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1   clambo   2020 Nov 14, 3:38pm  

Which asset is your IRA invested in?
2   mell   2020 Nov 14, 3:50pm  

Theoretically (and unlikely but maybe practically) yes. While banks time and time again most likely will get bailed out by the Federal Reserver / taxpayer, you can split your account(s) into multiple accounts not going over $250K. It's worth respecting the $250K FDIC insurance threshold if it makes you sleep better overnight.
3   Bitcoin   2020 Nov 14, 3:54pm  

A % of my net worth is invested in Bitcoin and other cryptos. You store Bitcoin on your hardware wallet. No entity can seize your Bitcoin as long as you hold the private keys.
4   just_passing_through   2020 Nov 14, 4:11pm  

mell says
you can split your account(s) into multiple accounts not going over $250K. It's worth respecting the $250K FDIC insurance threshold if it makes you sleep better overnight.


That's what I do. Also some brokerages do sweeps where they save your cash in several banks so that you don't go over.
5   Rin   2020 Nov 14, 4:16pm  

I think you only need to worry about cash balances.

Equities not only have the SIPC $500K protection for the broker but also, each security is cleared through DTCC so there's always a way to recover stocks, as stocks don't go missing whereas banks clearly don't have enough cash deposits for all their money accounts.
6   Robert Sproul   2020 Nov 14, 6:33pm  

rocketjoe79 says
FDIC insured for $250K

The next bank bail-out might be a Cyprus style bail-in. I guess that is when we find out that our deposits are assets of the bank, and we are unsecured creditors. Dodd-Frank provided for it and it seems like they will use it someday.
7   Dholliday126   2020 Nov 14, 7:57pm  

Bank runs became extinct ever since the fiat money printing press came into existence, you'll be fine.

If it's an IRA it should be in stocks anyhow.
8   mell   2020 Nov 14, 9:13pm  

TrumpingTits says
mell says
Theoretically (and unlikely but maybe practically) yes. While banks time and time again most likely will get bailed out by the Federal Reserver / taxpayer, you can split your account(s) into multiple accounts not going over $250K. It's worth respecting the $250K FDIC insurance threshold if it makes you sleep better overnight.


Nope. IRAs are not covered by deposit insurance. Only regular bank accounts are.


They are insured at many banks for the same 250k but it's not mandatory.
9   WookieMan   2020 Nov 14, 9:46pm  

G36 says
No entity can seize your Bitcoin as long as you hold the private keys

You’re right. BTC can live on a hard drive. But no entity or person is going to want it if bank runs are occurring. People will want physical resources or cash before BTC. BTC won’t even be transferable in that scenario most likely.

Food, water and bullets are more valuable at that point. Zero people will be seeking out more BTC that potentially is not transferable without a fully operational electric grid.
10   Misc   2020 Nov 15, 6:58pm  

SIPC is NOT backed by the government. You are really on your own unless it is FDIC insured, and then only up to the $250k limit per account.
11   theoakman   2020 Nov 15, 7:20pm  

Dholliday126 says
Bank runs became extinct ever since the fiat money printing press came into existence, you'll be fine.

If it's an IRA it should be in stocks anyhow.


Were you around in 2008?
12   Patrick   2020 Nov 15, 7:21pm  

Misc says
SIPC is NOT backed by the government. You are really on your own unless it is FDIC insured, and then only up to the $250k limit per account.


Yes, I kinda remember this from working at Schwab. SIPC seems pretty iffy compared to FDIC. They picked the initials to deliberately confuse people, imho.

I was also quite shocked to discover that brokerages don't actually keep your stock on hand. They trade it to make profits for themselves. They just have to come up with it when you want it, kinda like a checking account does with your cash. Not all those checking balances are actually on hand, only maybe 10% of the total deposits or whatever it is now that banks got everything they ever wanted from Democrats like Obama. Not saying Trump is into bank regulation either, as far as I know.
13   Patrick   2020 Nov 15, 7:23pm  

It was also quite a shock to discover that Money Market accounts are not cash balances, and there is no guarantee you'll get your money back. They look like it, with a dollar value, but in 2001 those values went below what people put it.

You didn't read the fine print? You don't have a lobbyist in DC? Well, then you're just fucked.
14   Patrick   2020 Nov 15, 7:26pm  

WookieMan says
Food, water and bullets are more valuable at that point.


It's interesting that ATF regulates exactly those things that can be used as currency in the event of a total financial breakdown: alcohol, tobacco, and firearms.

After WWII ended and the Nazis lost, their currency went to zero and people used cigarettes as currency for a few years.

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