Indymac however was a bank. Your money is safe in any bank covered by FDIC. Furthermore your check drawn on any bank covered by FDIC will always timely clear regardless of whether the bank is solvent or not -- Assuming you have deposited money to cover it of course. That's the beauty of the U.S. Federal Reserve and Banking system. You never have to worry about whether your bank is solvent or not. Demand deposits will always be honored. Now Brokers and SIPC are a different story. SIPC is there to protect Brokers from you, while appearing to offer clients protection. Got a problem with your broker, you'll probably have to go through arbitration. (Did you sign the agreement when you opened your account?). The professional arbitrator in the room just happens to go Elk Hunting each year with your broker. Better take a good lawyer along. Odds are not in your favor.
CNBC was reporting that the accounts would be covered by SIPC and not the FDIC. In an interview today on CNBC , Robinhood said they would make money from the fees they get from the merchant when a debit card is used and they would invest the money in "government securities". I wish the host would have asked how you make money investing at 2% or less and paying out 3%.
I imagine the business case is to gather assets/customers who can be driven to the brokerage side and later sold on other high-margin financial products e.g. credit cards. Not to mention masses of data they'll generate on customer spending habits. Won't work if the customers are miserly traders who plop in $100k to collect the extra bps and forget about the account, but it might if they're millennials with an average balance of $5k, another $40k flowing through and earning debit card fees, and a final $5k which ends up on the brokerage side generating huge order flow payments.
Trade press reports SIPC only no FDIC - so a $250,000 cap for now. Wonder how the states will react to nonFDIC deposit collection and check clearing? Free ATM access is going to be expensive for them. It will be curious/fun to watch as it pans out.
Everybody knows. (Not the original of course, but the most pleasing to the ear...Especially in the context of Bernie et al.)
Interactive Brokers used to be the winner when it comes to low cost and interest earned on cash in account. Now, Robinhood has beaten Interactive Brokers on their own game. Kudos to Robinhood. IB, take note of this new competitor.