[stanleydrew]

It's a matter of differing expectations.

When you purchase stock in a bank, there is a reasonable expectation that your investment could lose value.

When you deposit money with a bank (in the United States in 2023), you basically never consider the possibility that you might not get it all back.

You can certainly argue that the expectation isn't fair, but I'm pretty confident it's nearly universal.

[hanoz]

In Britain the protected amount is £85k per person per banking group, and it's universal that anyone with more than that splits it over accounts with multiple banks, taking care to make sure the banks aren't part of the same banking group.

Is it any different over there, albeit for the rather higher limit, in America?

[stanleydrew]

The whole reason we're having this discussion is that it appears to not be universal for anyone with more than the insured limit to split deposits over multiple accounts.

But there's also a big distinction between the working capital required for a business and the size of e.g. a personal savings account, which is kind of getting lost here.

If your payroll is $1M every month then it may not really be practical to split deposits across many accounts.

[tome]

> If your payroll is $1M every month then it may not really be practical to split deposits across many accounts.

Why not? That's only four accounts' worth of full protection.

[Kephael]

Sure you do, banks fail and you shouldn't expect more than $250,000 of coverage.

[tome]

> When you deposit money with a bank (in the United States in 2023), you basically never consider the possibility that you might not get it all back.

This is an assumption which desperately needs to change, in my opinion, otherwise the risk of bank runs will be a think ad infinitum.

[stanleydrew]

Isn't the risk of bank runs increased without this assumption? If we're all consistently attentive and worried that we may not get our bank deposits back, then every minor hiccup at a bank could plausibly cause a run.

[tome]

I wonder if it works at both extremes:

1. if you know your deposits are at risk then you actively work to derisk them, for example placing most of your cash in T-Bills.

2. if you know your deposits are safe then you just keep them in the bank.

The middle seems less stable.