Credit Slips – Adam Levitin: “Silicon Valley Bank seems to have had large amounts of uninsured deposits from businesses and high net worth individuals. And those uninsured deposits are likely to be impaired in the receivership, meaning that they will not get paid 100 cents on the dollar whenever they do get paid. But here’s the thing:  there are turnkey products that enable depositors to insure much, much larger amounts than the FDIC-insurance cap of $250k/depositor/account type. For years and years there’s been deposit brokerage services that spread out deposits at multiple banks, all in amounts under the FDIC insured cap. The best known service is called CDARS-Certificat of Deposit Account Registry Service. It’s offered by IntraFi (formerly Promontory). I don’t know if SVB participated in CDARS, but it’s a pretty straightforward solution to the deposit insurance cap. Here’s how it works. Instead of having, say $10 million in one bank with only $250k insured, it’s spread around 40 banks in $250k increments. It would be a pain to have to open 40 bank accounts, however. CDARS solution is to have a bunch of banks in its network: they banks want to join because it’s a way for them to get large deposits without having any customer relationship.  So with CDARS, you deposit $10 million in one bank, which then opens up accounts in its name for your benefit at other banks. Even though the accounts at the other banks are not in your name, you benefit from FDIC pass-through insurance on those account…”