Recent news regarding bank failures last week and through today may be prompting questions from our clients regarding any impact on the availability of their monies if needed for withdrawals.
At issue for the banks in question is their ability to meet the withdrawal needs of customer funds above the $250,000 Federal Deposit Insurance Corporation (FDIC) threshold of guarantee for monies held at the banks.
If money is held in a money market fund, it does not belong to a bank. A money market fund invests in a portfolio of multiple issuers and securities (generally not issued by the custodian).
As part of our role as investment consultants, we have policies in place to monitor client monies under our care to try and ensure (and insure) that balances in bank deposits never exceed the FDIC insured amount of $250,000. We manually purchase money market funds when we see balances accumulating in any bank product.
The link below contains a good response from Charles Schwab Corporation that many of our clients use as their custodian. We will keep you posted with information should more events unfold.