[Spooky23]

The customers are part of the grift.

I have a friend who used to run cash operations for a midsize bank. When they outsourced the operation, she basically laid out her idea where the money savings came from, which boiled down to eliminating internal controls necessary to operate... if you’re a bank. Compartmentalized physical security operations don’t scale up quickly.

End of the day, it’s the usual story of corporate incompetence and regulators looking the other way. At the end of the day, FDIC is insuring all of this bullshit.

[simplicio]

According to the article, in previous cases the Courts have found the banks responsible for losses held in 3rd party vaults, presumably to discourage exactly this kind of effort to dodge liability.

[Spooky23]

Oh of course. But someone made the business decision anyway.

Storing money is probably the single oldest operating practice in history of banking. If you time travelled a banker from 1920 to 2020, he’d adapt pretty quickly.

An incompetent company like Garda shouldn’t be able to get away with fraud at this scale. The regulations and internal controls are fubar.

[gruez]

The banks might be ultimately responsible, but if they go under the FDIC is still responsible for repaying the depositors. What else are you going to tell them? "Sorry grandma, FDIC deposit insurance doesn't cover losses held in 3rd party vaults so all your life savings are lost" would be political suicide.

[spydum]

FFIEC could revoke your status as a TSP though, and poof, watch your revenue dry up as wells fargo, boa and all the other big banks suddenly can't use your services.