A private FDIC
The Certificate of Deposit Account Registry Service
, or CDARS
, is a way to conveniently spread bank accounts across multiple banks. CDARS, run by privately held Promontory Interfinancial Network, offers its customers up to $50 million of deposit insurance
, or exactly 500 times single account limit mandated by the FDIC. Promontory does this by arranging to distribute client funds nationwide in $100K increments to over 2,300 banks. Promontory is nothing if not well connected: while founders Mark Jacobsen previously served as Chief of Staff at the FDIC
, co-founders Alan Blinder was Vice Chairman of the Federal Reserve
and Eugene Ludwig was Comptroller of the Currency
, several former members of the FDIC currently serve on Promotory's board.
Not surprisingly, some folks are openly critical of Promotory, some going so far as to state "It undermines a lot of the safeguards around the FDIC deposit fund."
posted by Mutant
on Sep 26, 2008 -