[qqqwerty]

> It is economics 101.

Please explain to me what happens to a sweep account when the primary bank fails. Asking for a friend, who quite literally tried to get an answer to this over the weekend. Also, I asked this question in the Mercury thread where the founders were responding to questions and got no answer.

And apologies, but I added an edit before I saw your comment. But in that edit, I explain how the sweep account was of little comfort during this SVB debacle. If they had needed to make payroll on Friday, they would have missed it. And while the FDIC has restored access to 100% of funds thanks to the intervention, it is still unclear how and when they would have gotten access to the sweep accounts in the case of no intervention.

[dgacmu]

I don't know, but I can tell you that my attorneys were pretty optimistic about the state of what would happen for the sweep accounts at SVB that invested in external money market funds before there was a resolution. But they're attorneys, so they're not going to commit to a hard answer unless you're paying them, and this was a general information call.

[qqqwerty]

That provides little comfort. I too would be optimistic that the funds would be recovered eventually. I am sure there are some vulture funds that will happily lend you some money at high interest rates while you spend six months in bankruptcy court trying to get access to your sweep accounts, but I don't think that is what most folks had in mind when they signed up for these types of accounts. Until the FDIC clarifies, or until these accounts are actually tested in a real life scenario, I suspect we won't be able to answer that question. So maybe we shouldn't promote them as a solution until someone can answer it confidently.

[Gwypaas]

Of course, any single point of failure is risky.