They are choosing to place money in the bank. This is a risk in and of itself.
Companies with treasury departments already know this. They can put money in money market funds, CDARs, cash sweeps, or any other vehicle to protect their cash. There are multiple ways to hold cash with very low duration risk that does not involve putting it in a bank.
FDIC is not an outdated idea. It is just the reality of the current financial system because it would require an excess of $20 trillion dollars to insure every deposit in the banks.
Although I knew about the FDIC coverage limit, it seems many did not. I've never had enough cash to test this, but I suppose I assumed if you put $251K in a bank account the web page turns red or something, or a dude calls you up to warn you that the last $1K is at risk. I'm guessing now that doesn't happen.
Companies with treasury departments already know this. They can put money in money market funds, CDARs, cash sweeps, or any other vehicle to protect their cash. There are multiple ways to hold cash with very low duration risk that does not involve putting it in a bank.
FDIC is not an outdated idea. It is just the reality of the current financial system because it would require an excess of $20 trillion dollars to insure every deposit in the banks.