π° Financial Models
Reciprocal Deposits
The mechanism that extends FDIC/NCUA deposit insurance far beyond the standard $250K cap. Banks exchange deposits with each other dollar-for-dollar through a network β your $5M deposit gets split across 20 banks at $250K each, fully insured at every one. You keep a single account relationship with your original bank. The network handles the rest invisibly.
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Minutes
4
Concepts
+15+30
Read+Quiz
1
How It Works
Standard FDIC limit: $250,000 per depositor, per bank, per ownership category
Reciprocal network: Splits large deposits across N banks
Extended coverage: Up to $50M (CDARS CDs), $125M (ICS sweep), $150M combined
ModernFi CUSO (CUs): Up to $15M NCUA insurance per account
Flow:
1. Depositor places $5M at Bank A (their "home bank")
2. Bank A keeps $250K (insured locally)
3. Bank A sends $250K each to Banks B through T via the network
4. Banks B-T each send $250K BACK to Bank A (dollar-for-dollar swap)
5. Result: Depositor has $5M fully insured, single relationship with Bank A
Bank A's total deposits unchanged (sent out = received back)
Settlement:
- Exchanges are reciprocal, so most flows cancel out (net settlement)
- Only NET differences settle β via Fedwire (real-time gross settlement)
- Settlement cycle: daily (end-of-day)
- A bank in $500M of gross placements may only settle a few $M in net differences