- Consider multiple bank relationships. Consider putting in place one or more additional banking relationships.
- NOTE: Credit facilities may require a borrower to maintain certain relationships with the lending bank. Be sure that opening an account with another bank does not breach a loan covenant.
- Consider banking with an institution that maintains excess deposit insurance. Massachusetts-chartered savings banks and co-operative banks are eligible to offer excess deposit insurance coverage, which covers all deposits above FDIC limits.
We are aware of the following products offered by banks. Please note that this list may not be complete, nor do we endorse any of the products listed below.
- Deposit placement programs. Many banks offer a program whereby a deposit in excess of the $250,000 FDIC deposit insurance limit is divided into amounts under the FDIC deposit insurance limit and placed on deposit at other banks. Deposit placement programs should be reviewed by counsel.
- Money market mutual fund sweeps. A money market mutual fund sweep moves funds in excess of a target balance amount into shares of a money market mutual fund selected by the customer. When funds in the customer’s deposit account drop below the target balance, the bank redeems money market mutual fund shares to sweep cash back to the bank in order to maintain the target balance. Money market mutual fund sweeps should be reviewed by counsel.
- NOTE: Some banks offer savings accounts called money market deposit accounts or money market savings accounts. These accounts represent deposit obligations of a bank and do not represent an interest in a money market mutual fund.
- Repo sweeps. Bank customers use repo sweeps to invest funds overnight in government securities. Funds swept into repos are generally swept back to the bank the following morning, creating exposure if the bank fails during the day. Repo sweeps should be reviewed by counsel.
- NOTE: Investments in securities carry their own risks.
Samantha M. KirbyPartnerCo-Chair of Banking and Consumer Financial Services
William E. SternPartner
Christine Andrea DochertyCounsel
Alexander J. CallenPartner