"Companies: In FDIC we trust"
CNNMoney writes "Companies: In FDIC we trust". The article says, "Jeff Cappelletti had his faith in the financial markets shaken in 2008, when he couldn't extricate about $1 million of his firm's overnight cash from the Reserve Fund, the world's largest money-market mutual fund. As the treasurer and risk manager of the U.S. division of G4S Secure Solutions, a firm that provides private security guards to corporations, banks and airports in 125 countries, Cappelletti now puts some of his firm's cash in an area of the market he deems impenetrable: bank accounts insured by the FDIC.... Cappelletti has been working with New York private equity firm StoneCastle Partners over the past six months to divide and distribute about $7 million of G4S's overnight cash among a few dozen community banks. StoneCastle has meted out these deposits in increments of less than $250,000 in order for the accounts to be backed by the FDIC.... StoneCastle's accounts are a twist on a longstanding practice called "brokered deposits" that have been typically used by high net worth individuals. Until recently, they were rarely used by major corporations.... Brokered deposits have been the lifeblood of community banks that need the funds to extend loans to the local community. The dark side is that they've also been a force behind some of the risky lending practices that caused community bank failures during the financial crisis."
