[dilyevsky]

Our HOA’s noname bank has a cash deposit sweep where they automatically loadbalance reserve cash between many banks so it stays under fdic limit. Done that for years. But what do i know I’m just an hoa board member not a unicorn startup cfo ¯\_(ツ)_/¯

[Arainach]

It's a lot easier to split $1M between four banks than to split $300M between 1200.

Side note: what HOA needs more than $250K in reserves? I'm all for a rainy day fund but I'd be asking for a reduction in dues...

[dilyevsky]

> what HOA needs more than $250K in reserves? I'm all for a rainy day fund but I'd be asking for a reduction in dues...

Leftover from suing the builder for improper waterproofing. We're spending that. Turns out retrofitting waterproofing costs a lot of money!

[ClumsyPilot]

> It's a lot easier to split $1M between four banks than to split $300M between 1200

If you tens of millions in cash, that money shoupd be managed proffeshionally. And anyway, why should preserving that money be anyone's problem other than the owner's?

There is no such thing as 'sace money' in the world. It just doesn't exist.

We as a society spend more effort making sure money is safe than we do making sure children are safe/not hungry.

A person walking outside cant be safe from getting hit by a car, a child cant be safe from getting an ilness, plant machinery cant be safe from breakdown, a city can't be safe from being hit by an earthquake.

There is no person or asset that is safe.

why should money be safe?

[fourmajor]

reserves are for more than a rainy day fund. They're also for saving up for predicted maintenance needs. For instance, say the HOA is responsible for the roofs of all the residences (like if the residences are condos). It's a somewhat predictable and high expense that you can map out to 10 years down the line or something. Then you save up for it in your reserves.

[gshubert17]

> reserves are for more than a rainy day fund.

Exactly. Many HOAs are now required to get periodic reserve studies that calculate predicted maintenance costs going out sometimes 30 years. Association Reserves did our study (<300 homes) and calculated we needed $1.4M to be 100% funded. Our HOA policies require only 60%, which we think reduces the risk of special assessments to a very low level, but that's still a lot of money. Association Reserves believes that property values in HOAs with high percentage reserves can be 5-10% higher than low percentage (<40%) reserves.

[rr888]

Our HOA has upcoming $1.5mil bill coming for a big job.

[cduzz]

You sure about that?

If you have an account with noname for $3,000k and noname has 12 accounts with localcorp1-localcorp12 each of $250k -- and noname goes poof, what happens?

I think, according to the preSVB rules, you get $250k from FDIC and then get a very strong claim to $2,750k from the rest of noname's assets (if no BigBank steps in to buy the part of noname you're connected to).

https://www.fdic.gov/consumers/banking/facts/priority.html

You'll (probably) get your money back, but after how much time?

[dilyevsky]

When I look at acc statement it shows a list of completely different banks each with <250K. If our bank goes bust I presume we get our first 250K that are sitting in the bank itself as soon as FDIC takes over which is enough for operations and will need to contact other banks for our money. It's more like a brokerage account than a regular deposit.

[cduzz]

I'd give those other banks a call and ask.

Also, per FDIC rules, the 250k is per party attached to the account, so at least for a married couple it seems to be $500k per account.

But hey, I'm sure it'll all be fine and we won't need to worry about the fine print.

[dragonwriter]

> Also, per FDIC rules, the 250k is per party attached to the account, so at least for a married couple it seems to be $500k per account.

Its per owner per account class, but what constitutes an owner varies by account class, and, IIRC, many class by definition have a single owner.

But, yeah, you can double your coverage in simple directly-owned accounts as a married couple by splitting funds between maxed out single accounts ($250K) for each party and a maxed out joint account ($500K) for a total of $1M in coverage, because single and joint accounts are separate categories.

[dragonwriter]

Brokered deposits are insured in the depositor (not brokers) name. If they still happen to be over the $250K limit, they are historically the least likely accounts to get full value back in a failure, but as long as there is less than the insurance limit per bank, they are fully covered.

[qqqwerty]

SVB offered a sweep account. Turns out it does not cover the lawyer fees that one will incur when trying to figure out how to recover those accounts. Maybe your HOA should hire a CFO ¯\_(ツ)_/¯

[dilyevsky]

We have all that infra. Part of the reason why hoa fees are just ridiculous these days