Recap: BA Devaluation, JetBlue Mini Mint, Pass Through Insurance & More

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• Want to workaround the BA devaluation w/ QR, but their website is all sorts of broken. Can't even get past the "verify your email" step. What a joke

• The NYTimes article is paywalled. What banks are at risk??

  • My take: The online companies having issues r not true banks. These r online companies (fintecs?) that are 'banking alternatives' that take your money and supposedly manages/puts them in a variety of real fdic banks for you, like maybe chasing the highest yields. Because ur $ supposedly gets deposited into a real fdic bank eventually, these companies advertise FDIC protection. In this story, these pseudo bank companies like Yotta hired a middleman company Synapse to do all the bank managing/bank shuffling for them. So 2 layers of middlemen between a customer & the final real fdic bank. But Synapse declared bankruptcy, and perhaps misappropriated 100mil of funds they were supposed to deposit in real banks for customers. FDIC protection does not apply because no FDIC banks went bankrupt -- just a middleman who was supposed to deposit customer funds into FDIC banks for you. So the customers have lost their $: the original pseudo bank companies like Yotta(the 1st middleman) says not their fault, they gave $ to Synapse to be deposited; Synapse(the 2nd middleman) went bankrupt; and the end FDIC bank(s) (like Evolve) said they don't have/weren't given the customers' $.

    Bottomline: make sure the 'bank' u put ur $ in is a real bank, not a company that purports to put ur money into a variety of fdic banks to get higher interest rates, etc. This 'bank' is not regulated or insured, and is like giving a random stranger on the street $ to deposit into a real bank for you. These r all online companies. But real brick & mortar banks do still have online banking, and real online-only FDIC banks do exist too (Ally, CIT, Synchrony, etc), so it's not an 'online banking is fraud/evil' thing. Do ur own due diligence. Cut out the middlemen & deposit straight into a real fdic bank, be it brick & mortar or online-only.

    • Sounds like the fidelity cash management account. They just put the money in Citi and other banks to get the fdic insurance. Doubt fidelity will crash and burn though.

      • Fidelity is a big financial firm. I think they are federally regulated, have all kinds of fiduciary requirements, and also potentially carry insurance in case there are any Fidelity bad actors. I believe they deposit customer funds themselves into FDIC banks -- they don't give customer funds to a (questionable?) middleman to invest into FDIC banks for them. Fidelity is probably fine.

  • https://www.nytimes.com/2024/07/09/business/synapse-bankruptcy-fintech-fdic-insurance.html?unlocked_article_code=1.6E0.qNGS.Ef-QJnpc8Qrw&smid=url-share

    Unlocked link...

  • I'm 99% sure this relates to some fintech "banks" that tell you your money is in trad banks but they're the ones that distribute your money as a middleman. There's plenty of news lately on people with no access to their funds with various fintechs.

    If you're going direct to a bank with funds, probably no issues or concerns, but fintechs offer that sweet, sweet higher APY in plenty of cases.

    • So would something like Robinhood be the equivalent?

  • British Airways, not Bank of America.

    • The NYTimes article is about the second item about "banks that aren't really banks", not about the first item about British Airways.

      The British Airways article is at Dan's Deals (not paywalled), not at NYTimes.