You are correct..BAC, Citigroup etc can not touch the money..it is segregated The money is there for safekeeping
That should read "are required not to touch the money". There is no watchdog sitting on some magical pile of cash in a locked room making sure BAC doesn't get its sticky fingers on it. Ultimately the segregated funds are safe to the same extent "faith and credit" are maintained in the Fed/Treasury, as what we are all relying on is the ability of authorities to make good on the promise of segregation.