[astura]

See, for example, Fidelity's FDIC-Insured Deposit Sweep Program.

https://accountopening.fidelity.com/ftgw/aong/aongapp/fdicBa...

>To provide you with the benefit of FDIC insurance eligibility, the cash balance in your account will be automatically swept into an interest-bearing FDIC-Insured Deposit Sweep position. Since FDIC insurance coverage is currently limited to $250,000 per qualified customer account per banking institution, Fidelity may use several banks, rather than just one, to maximize your FDIC coverage.

[SOLAR_FIELDS]

Mercury has a been taking this idea to a pretty logical extreme lately. At first it was just $1M, but it’s now $5M

https://mercury.com/blog/company-news/understanding-bank-swe...

[bee_rider]

Interesting. So is the coverage cap actually accomplishing much?

[freeone3000]

It spreads risk throughout the system. In a maximally-resilient scenario, everyone would have a small deposit at every possible bank -- then when any bank fails, it's "no big deal", and you won't panic and withdraw your money from the rest. This is similar -- any particular failure is going to be for half (or less!) of your money, instead of all of it, reducing the urgency and spreading out the risk.

[bee_rider]

Ah, that’s interesting. So spreading the accounts across multiple banks is essentially accomplishing the goal of the program.