Is IB safe enough to use as a bank for > 500,000 USD?

[short&naked]

Funds are currently located in a bank that has FDIC protection of 250,000 USD (i.e. won't cover all funds). Would the funds be better protected in an IB account?

 

[TheGoonior]

Not sure if this applies to you, but it might be worth talking to an IB rep for the specifics...

http://www.interactivebrokers.com/e...smgmt/promontory_insured_network_deposits.htm

 

[newwurldmn]

A lot of brokerages will do automatic sweeps to several accounts so that you won't be over 250,000 in any account. It's all done behind the scenes. So your 500k in cash will be split between two accounts and your entire balance will be insured.

 

[Catoosa]

You could leave 250K in the bank and move the excess to IB. You could split the money between several banks (preferably not more than 100K per bank). I do not know if the rules on the 250K limit have changed but I remember reading the rules applicable when the government first started the 250K FDIC insurance that had some qualifications ( the insurance would cover up to 250K but not to exceed the dollar amount in the account at the time the 250K insurance program started or 100K). These qualifications my no longer exist.

As for the safety of large accounts at IB, I think the large cash balances are safer at IB than any bank based on what I have seen happen with banks both large and small. I like the idea of dividing the cash among several brokers and clearing firms with IB being the safest self clearing broker to trust with cash. Just my opinion which of course is not always correct.

That is one great user name you came up with for use on ET.

 

[noob_trad3r]

e-trade does extended fdic

 

[hoodooman]

[PDF]
Stay within FDIC limits and your deposit accounts are 100% safe ...
www.fdic.gov/regulations/resources/brochures/PennyBrochure_English.pdf
File Format: PDF/Adobe Acrobat - Quick View
Nov 25, 2009 – insurance, the safer your money. For more ... has ever lost a penny of insured deposits. ... all of the money you have in bank deposit accounts ...

I'm happy. I have seven fdic insured bank accounts.

 

[brownsfan019]

And how strong is that insurance from the govt anyways?

Wouldn't that make for some interesting trading - FDIC goes belly up, ma and pa are out of luck.

I kid, that would never happen.

Right?

 

[hoodooman]

round and round she goes and where she stops nobody knows.

 

[Daal]

IB is a BBB rated company(If memory serves), the idea that uninsured money is safe there is simply not supported by the facts

 

[def]

Quote from Daal:

IB is a BBB rated company(If memory serves), the idea that uninsured money is safe there is simply not supported by the facts

Your memory doesn't serve - IB LLC is rated A-/A-2 by S&P.

What is safe and what facts do you need for support?

Is safe 100% guaranteed - then no.

However if safe is defined and support is evidenced by a firm that has little if no debt, billions in shareholder capital, a history of steady profits, a conservative risk management policy, additional insurance and a track record of over 30 years, and most importantly, a conservative investment policy, then yes, I would say IB is safe and in a better financial position than most - if not all - firms in this industry.