SIPC brokerage insurance

[Edmond]

Supposed everything goes down the toilet and there’s a run on the banks. The banks can keep you deposits because of the “bail in” rule.

Brokerage house aren’t allowed bail ins because your money is your money and not lended out.
Different rules.

Your money in your brokerage is insured by SIPC. Can SIPC go broke covering the loses that would incur if they’re was a melt down?

 

[Sig]

Supposed everything goes down the toilet and there’s a run on the banks. The banks can keep you deposits because of the “bail in” rule.

Brokerage house aren’t allowed bail ins because your money is your money and not lended out.
Different rules.

Your money in your brokerage is insured by SIPC. Can SIPC go broke covering the loses that would incur if they’re was a melt down?

What bank "bail in" rule are you referring to? Banks actually fail all the time, usually small savings and loans or community banks, and there is no "bail in" that happens, FDIC just pays the delta and protects deposits.

Brokers lend money as well as banks, where do you think margin loans come from? Same basic rules.

If you're really worried about it, buy a treasury in your name and hold it on deposit at your broker. You generally take a 5% haircut and can buy off the security of the treasury. If the broker goes under, everything held in your name goes directly back to you, no passing through SIPC. If it's held in street name, it all gets frozen and you get it when SIPC gets through sorting everything. That could be a while if there's a system failure. Of course if there is a systemic failure that's to the level where SIPC coverage is in question, we're all in a lot deeper poop than any questions about when you get your money back.

 

[murray t turtle]

Supposed everything goes down the toilet and there’s a run on the banks. The banks can keep you deposits because of the “bail in” rule.

Brokerage house aren’t allowed bail ins because your money is your money and not lended out.
Different rules.

Your money in your brokerage is insured by SIPC. Can SIPC go broke covering the loses that would incur if they’re was a melt down?

%%
NOT very likely @ all. Ed, besides that, a few good inverse ETFs would also solve that problem. You may be surprised how many people wire/mail money in, not out + do that monthly/quarterly.
Don't confuse that with mutual fund redemptions ,which tend to be done @ dumb times.
And then you have Jim Rogers+ W Buffet types, that like to buy when low/down...………………………………………………………………………………………………………………………………………………..

 

[lanty]

Has the situation changed? How can we overcome the issue?

 

[benhatchins]

Man, finding a good insurance company can be a real pain sometimes, you know? But then I stumbled upon these allsup customer support, this insurance company that's been making waves lately. They really seem to have their act together, so maybe my search is finally over!