HM Bradley - is it safe - FDIC response

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frugalor
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Re: HM Bradley - is it safe - FDIC response

Post by frugalor »

SnowBog wrote: Fri Jul 08, 2022 2:30 pm
As for the fee on the card - I look at it more simply I guess - the card is effectively free to me... At 3% on the "top" spend category - it's the highest "general" card I have access to. My "normal" cards would be the 2% Fidelity or Citi cards. If I spend $9k at the higher 3% level, the card paid for itself on its own, anything more than that and I'm coming out ahead. I recently moved to the BoA Unlimited Cash card @ 2.625% with their Platinum Honors, which makes justifying the fee on the cash back alone harder (would need to have $24k of spend in top category)... But then I look at "extra" interest on the account, assuming I get at least a 1% bonus interest rate - the card pays for itself with an average savings balance of just $9000. Either way, the card is effectively free to me.
The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

Vulcan wrote: Fri Jul 08, 2022 2:37 pm
I could even argue that the underlying rates increasing is a "good thing" for their business model, as it means their "costs" to provide higher rates is less than it was previously. Having to pay 3% when rates there were a while were < 0.5% is a big margin. If rates go back to 1-2% range, that extra 1% (or so) doesn't cost them nearly as much - which should be a good thing for their business model.
If their business model over the long term consists of paying <1% over the market rates vs. ~3%, then they are welcome to explore that business model without me as a customer :-)
I guess I should have finished my thought's... I don't expect long term that banks will be paying close to 2% on savings accounts. They might get there with the current inflation/rates being high right now, but I don't think (OK I hope) they don't sustain that...

As to HMBradley, my mental imagine is their business model/unique draw is to pay better than market rates for customers who can save 20% of their deposits per quarter. Currently, that's expressed as a flat rate - with 2022 being 3% (assuming you meet requirements for top tier boost, including savings rate, direct deposit, credit card, etc.).

Presumably they keep the flat rate approach (as it's what they've done so far), and maybe they raise it if rates look like they are going higher and will stay higher, so as to keep their "better than market rate" model.

And that could mean that there will be a period of time where the "premium" over the market rates decreases (as market rates rise), which is what you are pointing out now that other rates are moving closer to what HMBradley has offered for nearly 2 years now. But it would also mean that there will be periods of time where that "premium" increases (as rates eventually fall), such as the past 2 years now. Regardless, so long as their model remains to provide a higher interest rate than I can easily find elsewhere - I plan on sticking around.

Now, if my FZDXX MM at Fidelity starts paying >= 3% - I'll likely move my money over there instead - keeping just the minimum in HMBradley to sustain my account at the top tier. Or more generically, if HMBradley no longer offers the best rate I can easily find, I'll move my money elsewhere. But unless they change the underlying model - I'm assuming that any such situation is temporary - and I'll try to keep my options open to move money back to HMBradley when they are the best option again [as they still are for me].
patrick
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Re: HM Bradley - is it safe - FDIC response

Post by patrick »

frugalor wrote: Fri Jul 08, 2022 2:53 pm The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
Coinbase has shut down cards of some people (myself included!) who used it to pay credit cards like this. It is certainly nice while it lasts but I would warn against expecting the card to last long once you start.

On a brighter note, you can still get 1% back on Paypal purchases with the Enzo debit card. They have explicitly recommended using it this way so it should last longer.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

frugalor wrote: Fri Jul 08, 2022 2:53 pm
SnowBog wrote: Fri Jul 08, 2022 2:30 pm
As for the fee on the card - I look at it more simply I guess - the card is effectively free to me... At 3% on the "top" spend category - it's the highest "general" card I have access to. My "normal" cards would be the 2% Fidelity or Citi cards. If I spend $9k at the higher 3% level, the card paid for itself on its own, anything more than that and I'm coming out ahead. I recently moved to the BoA Unlimited Cash card @ 2.625% with their Platinum Honors, which makes justifying the fee on the cash back alone harder (would need to have $24k of spend in top category)... But then I look at "extra" interest on the account, assuming I get at least a 1% bonus interest rate - the card pays for itself with an average savings balance of just $9000. Either way, the card is effectively free to me.
The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
Sorry - my math is off above - I was thinking it was $90 a year... At $60/year - only need a $6k credit card spend or $6k @ 1% higher interest rate pays for the card, or some combination of the two...

For clarity, I wasn't attempting to say the HMB card was "good" on its own - but that it was "good enough" to pay for itself through the combination of a higher interest rate on savings than you can find elsewhere and/or the higher cashback. Especially if you can manage your spend on the card to keep the bulk of it in the "top" 3% category (vs. pushing spend into the 2% (2nd highest expense category) or 1% tiers (everything else).

Rough guess, my average monthly balance in my HMBradley account this year will be $80k (I accelerated my normal funding plan this year), at 3% that's roughly $2,400+ in interest I'll receive. Even if MM rates get to 2% for the rest of the year, I'll still make far more than the $60 annual fee of the credit card with HMBradley. And with my cc spend, I've already made more than the fee in cash back (compared with my prior 2% card). So, I'm way out ahead with both combined. As such, I just don't mind the fee - as I'm still very much making more than its costing me...

But yes, there are absolutely better cards - especially the BoA options that you and I both mentioned - at least assuming you can qualify for their "honors" tiers for the bonus cash back. Those BoA cards are where the bulk of my spend goes.

But let's say I wanted to pay for something expensive... The "custom" BoA cards have a quarterly cap, but ideally the first $2500 would go on a 5.25% card... After that - the best I have left - is the 3% HMBradley card - which slightly beats out the 2.625% BoA "unlimited" card (with honors bonus). And - per my prior posts - it gets paid from my HMBradley savings account without counting as a withdrawal. So, I get slightly more cashback than I'd otherwise get, and keep my HMBradley account from growing too quickly, while ultimately maintaining more liquidity in my HMBradley account while staying at the 20% savings rate required to keep the top tier.

FWIW - I have zero interest in cryto - so have no intention of getting the Coinbase card. But glad it's working out for you! :beer
engaged73016
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Re: HM Bradley - is it safe - FDIC response

Post by engaged73016 »

frugalor wrote: Fri Jul 08, 2022 2:53 pm
SnowBog wrote: Fri Jul 08, 2022 2:30 pm
As for the fee on the card - I look at it more simply I guess - the card is effectively free to me... At 3% on the "top" spend category - it's the highest "general" card I have access to. My "normal" cards would be the 2% Fidelity or Citi cards. If I spend $9k at the higher 3% level, the card paid for itself on its own, anything more than that and I'm coming out ahead. I recently moved to the BoA Unlimited Cash card @ 2.625% with their Platinum Honors, which makes justifying the fee on the cash back alone harder (would need to have $24k of spend in top category)... But then I look at "extra" interest on the account, assuming I get at least a 1% bonus interest rate - the card pays for itself with an average savings balance of just $9000. Either way, the card is effectively free to me.
The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
I have never looked into CC reward optimization too much, so for me, the HMBradley is actually both my "best" one and the only one I have to pay for.

Which CC gives 5% on utilities/gas?
frugalor
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Re: HM Bradley - is it safe - FDIC response

Post by frugalor »

patrick wrote: Fri Jul 08, 2022 3:08 pm
frugalor wrote: Fri Jul 08, 2022 2:53 pm The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
Coinbase has shut down cards of some people (myself included!) who used it to pay credit cards like this. It is certainly nice while it lasts but I would warn against expecting the card to last long once you start.

On a brighter note, you can still get 1% back on Paypal purchases with the Enzo debit card. They have explicitly recommended using it this way so it should last longer.
There you go, still better than plain 3% HMBradley card.

What about Discover Debit card that pays 1%. Have you tried it?
frugalor
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Re: HM Bradley - is it safe - FDIC response

Post by frugalor »

engaged73016 wrote: Fri Jul 08, 2022 6:29 pm
frugalor wrote: Fri Jul 08, 2022 2:53 pm
SnowBog wrote: Fri Jul 08, 2022 2:30 pm
As for the fee on the card - I look at it more simply I guess - the card is effectively free to me... At 3% on the "top" spend category - it's the highest "general" card I have access to. My "normal" cards would be the 2% Fidelity or Citi cards. If I spend $9k at the higher 3% level, the card paid for itself on its own, anything more than that and I'm coming out ahead. I recently moved to the BoA Unlimited Cash card @ 2.625% with their Platinum Honors, which makes justifying the fee on the cash back alone harder (would need to have $24k of spend in top category)... But then I look at "extra" interest on the account, assuming I get at least a 1% bonus interest rate - the card pays for itself with an average savings balance of just $9000. Either way, the card is effectively free to me.
The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
I have never looked into CC reward optimization too much, so for me, the HMBradley is actually both my "best" one and the only one I have to pay for.

Which CC gives 5% on utilities/gas?
USBank Cash +
frugalor
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Re: HM Bradley - is it safe - FDIC response

Post by frugalor »

engaged73016 wrote: Fri Jul 08, 2022 6:29 pm
frugalor wrote: Fri Jul 08, 2022 2:53 pm
SnowBog wrote: Fri Jul 08, 2022 2:30 pm
As for the fee on the card - I look at it more simply I guess - the card is effectively free to me... At 3% on the "top" spend category - it's the highest "general" card I have access to. My "normal" cards would be the 2% Fidelity or Citi cards. If I spend $9k at the higher 3% level, the card paid for itself on its own, anything more than that and I'm coming out ahead. I recently moved to the BoA Unlimited Cash card @ 2.625% with their Platinum Honors, which makes justifying the fee on the cash back alone harder (would need to have $24k of spend in top category)... But then I look at "extra" interest on the account, assuming I get at least a 1% bonus interest rate - the card pays for itself with an average savings balance of just $9000. Either way, the card is effectively free to me.
The HMBradley credit card is not that good.

The best set up I know of is this. For general stuff, pay it with BoA Unlimited Cash card, get 2.62%, and pay off BoA Unlimited Cash card with paypal bill pay using the coinbase card, getting an additional 2% (in crypto). I can't find HMBradley in paypal bill pay system, so 3% alone is not that great.

For other more specialized stuff like utilities, gas, etc, you can get 5% or around 5% before the paypal bill pay trick.

So using the HMBradley is a cost by itself, even without the $60 fee, that we have to pay to get the 3% interest rate.
I have never looked into CC reward optimization too much, so for me, the HMBradley is actually both my "best" one and the only one I have to pay for.

Which CC gives 5% on utilities/gas?
USBank Cash + for utilities

Citi custom cash for gas

or BoA Customized Cash for gas, more than 5% with the .75 boost
frugalor
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Re: HM Bradley - is it safe - FDIC response

Post by frugalor »

Just learned about t-bill rates have increased a lot: https://home.treasury.gov/resource-cent ... value=2022

HMBradley is looking less attractive
checkyourmath
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Re: HM Bradley - is it safe - FDIC response

Post by checkyourmath »

frugalor wrote: Sun Jul 10, 2022 11:48 am Just learned about t-bill rates have increased a lot: https://home.treasury.gov/resource-cent ... value=2022

HMBradley is looking less attractive
Why is Ally raising their savings rate every two weeks while HM Bradley requires two direct deposits per month, a savings rate of 20 percent, and a minimum credit card spend? It feels a little ponzi like as they recently deceased their savings rate while other high yield options are raising their rates.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

checkyourmath wrote: Mon Jul 11, 2022 1:10 am
frugalor wrote: Sun Jul 10, 2022 11:48 am Just learned about t-bill rates have increased a lot: https://home.treasury.gov/resource-cent ... value=2022

HMBradley is looking less attractive
Why is Ally raising their savings rate every two weeks while HM Bradley requires two direct deposits per month, a savings rate of 20 percent, and a minimum credit card spend? It feels a little ponzi like as they recently deceased their savings rate while other high yield options are raising their rates.
To inverse the question... Why was HMBradley offering a 3% rate all year, and all of last year (actually it was up to 3.5% in 2021) when most other "high yield savings accounts" were offering 0.5% or less (until recently - where some are moving towards 1.5% - still < 50% of what HMBradley has been offering).

They've had the highest FDIC insured interest rate of any entity (excluding some that had higher amounts on smaller deposits - like up to the first $5k) for nearly 2 years now. And rates of Ally/etc. would need to effectively double before they'd even match HMBradley.

Ultimately, my belief is this is HMBradley's business model. They offer a higher rate than you can generally find elsewhere - but only for those who can save 20% of their deposits. That's what makes them unique.

Time will tell if the business model is sustainable. But while it is, I'm happy to collect the highest rate still available on up to $100k in an FDIC insured account.
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Vulcan
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Re: HM Bradley - is it safe - FDIC response

Post by Vulcan »

SnowBog wrote: Mon Jul 11, 2022 8:59 am Time will tell if the business model is sustainable.
If it were sustainable, they wouldn't close it to new customers.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

Vulcan wrote: Mon Jul 11, 2022 9:07 am
SnowBog wrote: Mon Jul 11, 2022 8:59 am Time will tell if the business model is sustainable.
If it were sustainable, they wouldn't close it to new customers.
Like I said, time will tell...

But personally, I don't see any issues with them moving back to invite only/waiting list. And I definitely don't think it means their business plan isn't sustainable... If it was truly the case its not sustainable, I think they'd be making bigger changes than we've seen (but again, time will tell).

But there's a lot more to a business than it's model. If they truly grew quicker than expected, they may very well need time to scale operations. More customers means more support calls, more government paperwork, more overhead.

Ultimately, all we can do is wait and see what happens.

I'm of the view that my money is in an FDIC insured bank earning a higher rate (on my entire balance) than I can anywhere else, even after accounting for the annual credit card fee and my time to optimize my savings rate and liquidity. I'll keep doing so until it no longer makes sense to do so...
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Vulcan
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Re: HM Bradley - is it safe - FDIC response

Post by Vulcan »

SnowBog wrote: Mon Jul 11, 2022 10:15 am
Vulcan wrote: Mon Jul 11, 2022 9:07 am
SnowBog wrote: Mon Jul 11, 2022 8:59 am Time will tell if the business model is sustainable.
If it were sustainable, they wouldn't close it to new customers.
Like I said, time will tell...

But personally, I don't see any issues with them moving back to invite only/waiting list. And I definitely don't think it means their business plan isn't sustainable... If it was truly the case its not sustainable, I think they'd be making bigger changes than we've seen (but again, time will tell).

But there's a lot more to a business than it's model. If they truly grew quicker than expected, they may very well need time to scale operations. More customers means more support calls, more government paperwork, more overhead.

Ultimately, all we can do is wait and see what happens.

I'm of the view that my money is in an FDIC insured bank earning a higher rate (on my entire balance) than I can anywhere else, even after accounting for the annual credit card fee and my time to optimize my savings rate and liquidity. I'll keep doing so until it no longer makes sense to do so...
It's not about scaling operations.
It's about paying for deposits for Hatch Bank (of whom HMB is a subsidiary).
They got enough deposits, so they stopped adding customers.
How long Hatch decides to continue to pay above market we will see.
For now, they are not taking any steps to shrink the gap.
What used to be 3% above market is now cut in half.
In a few more weeks (after the next fed meeting) it will probably become less than a third of what it used to be.
At that point I personally am likely to bolt.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

Vulcan wrote: Mon Jul 11, 2022 10:37 am For now, they are not taking any steps to shrink the gap.
What used to be 3% above market is now cut in half.
In a few more weeks (after the next fed meeting) it will probably become less than a third of what it used to be.
As best as I recall, they were paying 3% (or 3.5% with CC boost) back when others like Ally were paying ± 1% range. When everyone else dropped their rates, they didn't (except for dropping that 0.5% CC boost and making the CC required for the 3%).

So in my memory (which may be wrong), I've seen them go from offering +2% over others to nearly +3% over others, now back down into the +1.5% range over others. Maybe that will get less (especially temporarily), but I'll be surprised if others get to 3% and stay there for 2 years (maybe longer) as HMBradley has done.

For clarity, I have no loyalty to HMBradley. If they don't continue to offer the best rates (on FDIC insured balances up to $100k) I'll take my money elsewhere.

But I'll give them credit for offering the best rates available on such balances for 2+ years now. That has been longer than I initially expected, especially as others were basically paying nothing. So they've earned my respect. (It's up to them if they keep it.)
Last edited by SnowBog on Tue Jul 12, 2022 12:18 pm, edited 1 time in total.
jst
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Re: HM Bradley - is it safe - FDIC response

Post by jst »

I was sure that once I took the step of getting the credit card, they'd lower the interest rate. I'm still amazed that it didn't happen.
JBTX
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

Vulcan wrote: Mon Jul 11, 2022 10:37 am
SnowBog wrote: Mon Jul 11, 2022 10:15 am
Vulcan wrote: Mon Jul 11, 2022 9:07 am
SnowBog wrote: Mon Jul 11, 2022 8:59 am Time will tell if the business model is sustainable.
If it were sustainable, they wouldn't close it to new customers.
Like I said, time will tell...

But personally, I don't see any issues with them moving back to invite only/waiting list. And I definitely don't think it means their business plan isn't sustainable... If it was truly the case its not sustainable, I think they'd be making bigger changes than we've seen (but again, time will tell).

But there's a lot more to a business than it's model. If they truly grew quicker than expected, they may very well need time to scale operations. More customers means more support calls, more government paperwork, more overhead.

Ultimately, all we can do is wait and see what happens.

I'm of the view that my money is in an FDIC insured bank earning a higher rate (on my entire balance) than I can anywhere else, even after accounting for the annual credit card fee and my time to optimize my savings rate and liquidity. I'll keep doing so until it no longer makes sense to do so...
It's not about scaling operations.
It's about paying for deposits for Hatch Bank (of whom HMB is a subsidiary).
They got enough deposits, so they stopped adding customers.
How long Hatch decides to continue to pay above market we will see.
For now, they are not taking any steps to shrink the gap.
What used to be 3% above market is now cut in half.
In a few more weeks (after the next fed meeting) it will probably become less than a third of what it used to be.
At that point I personally am likely to bolt.
What we don’t know is what the weighted average interest rate is for all deposits. Not all disinters qualify for the 3%. It may be that on average their interest payout is similar to Ally/Discover, etc.
checkyourmath
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Re: HM Bradley - is it safe - FDIC response

Post by checkyourmath »

SnowBog wrote: Mon Jul 11, 2022 1:11 pm
Vulcan wrote: Mon Jul 11, 2022 10:37 am For now, they are not taking any steps to shrink the gap.
What used to be 3% above market is now cut in half.
In a few more weeks (after the next fed meeting) it will probably become less than a third of what it used to be.
As best as I recall, they were paying 3% (or 3.5% with CC boost) back when others like Ally were paying ± 1% range. When everyone else dropped their rates, they didn't (except for dropping that 0.5% CC boost and making the CC required for the 3%).

So in my memory (which may be wrong), I've seen them go from offering +2% over others to nearly +3% over others, now back down into the +1.5% range over others. Maybe that will get less (especially temporarily), but I'll be surprised if others get to 3% and stay there for 2 years (maybe longer) as HMBradley has done.

For clarity, I have no loyalty to HMBradley. If they don't continue to over the best rates (on FDIC insured balances up to $100k) I'll take my money elsewhere.

But I'll give them credit for offering the best rates available on such balances for 2+ years now. That has been longer than I initially expected, especially as others were basically paying nothing. So they've earned my respect. (It's up to them if they keep it.)
Super valid point especially with the forecast for interest rates starting to get cut next year. HMB has over 500 million in deposits. I don't see any other bank offering 3 percent anytime soon. Ally is chasing the Fed funds repo rate. In a year from now everyone that wanted to jump ship will be happy with their 3 percent if it is still around. HMB seems to be a little bit of a mystery to me. They don't offer a lot of info about the company. I know Ally and Citi are massively into the car loan world. I wonder who HMB is loaning the deposits. If they are just buying treasuries they are getting murdered and I don't expect them to be around much longer if that is their business model.
patrick
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Re: HM Bradley - is it safe - FDIC response

Post by patrick »

checkyourmath wrote: Tue Jul 12, 2022 11:58 am Super valid point especially with the forecast for interest rates starting to get cut next year. HMB has over 500 million in deposits. I don't see any other bank offering 3 percent anytime soon. Ally is chasing the Fed funds repo rate. In a year from now everyone that wanted to jump ship will be happy with their 3 percent if it is still around. HMB seems to be a little bit of a mystery to me. They don't offer a lot of info about the company. I know Ally and Citi are massively into the car loan world. I wonder who HMB is loaning the deposits. If they are just buying treasuries they are getting murdered and I don't expect them to be around much longer if that is their business model.
Some accounts already offer more than 3%, though with much lower limits than HMBradley. These are the ones I consider best (see https://www.doctorofcredit.com/high-int ... Nationwide for a much longer list):

6.17% at Digital Credit Union. $1,000 limit.
6% at H-E-B Debit. $2,000 limit. Requires some activity every 90 days to avoid fees, a $1 ACH push is sufficient.
4% at Current. $6,000 limit.

To me the main alternative to HMBradley is bonds, not a regular savings account. I'm not happy with 3% when TIPS are less risky, and have a better expected return too if you assume they have the same expected return as nominal treasuries and account for state taxes.
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Vulcan
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Re: HM Bradley - is it safe - FDIC response

Post by Vulcan »

Vulcan wrote: Mon Jul 11, 2022 10:37 am
SnowBog wrote: Mon Jul 11, 2022 10:15 am
Vulcan wrote: Mon Jul 11, 2022 9:07 am
SnowBog wrote: Mon Jul 11, 2022 8:59 am Time will tell if the business model is sustainable.
If it were sustainable, they wouldn't close it to new customers.
Like I said, time will tell...

But personally, I don't see any issues with them moving back to invite only/waiting list. And I definitely don't think it means their business plan isn't sustainable... If it was truly the case its not sustainable, I think they'd be making bigger changes than we've seen (but again, time will tell).

But there's a lot more to a business than it's model. If they truly grew quicker than expected, they may very well need time to scale operations. More customers means more support calls, more government paperwork, more overhead.

Ultimately, all we can do is wait and see what happens.

I'm of the view that my money is in an FDIC insured bank earning a higher rate (on my entire balance) than I can anywhere else, even after accounting for the annual credit card fee and my time to optimize my savings rate and liquidity. I'll keep doing so until it no longer makes sense to do so...
It's not about scaling operations.
It's about paying for deposits for Hatch Bank (of whom HMB is a subsidiary).
They got enough deposits, so they stopped adding customers.
How long Hatch decides to continue to pay above market we will see.
For now, they are not taking any steps to shrink the gap.
What used to be 3% above market is now cut in half.
In a few more weeks (after the next fed meeting) it will probably become less than a third of what it used to be.
At that point I personally am likely to bolt.
I went ahead and closed my HMB credit card (it was about to be charged the annual fee for the 2nd year) and cancelled direct deposit.

In my estimate the gap between the HMB account and VMFXX will shrink to less than 0.5% if not completely disappear well before the end of this quarter.

It was a good temporary solution while it was offering a significant premium over the market rates, but my heart wasn't in it for the long run anyway.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Vulcan
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Re: HM Bradley - is it safe - FDIC response

Post by Vulcan »

checkyourmath wrote: Tue Jul 12, 2022 11:58 am HMB seems to be a little bit of a mystery to me. They don't offer a lot of info about the company. I know Ally and Citi are massively into the car loan world. I wonder who HMB is loaning the deposits. If they are just buying treasuries they are getting murdered and I don't expect them to be around much longer if that is their business model.
HMBradley is a corporate child of Hatch Bank. Essentially, they are their marketing arm to get the deposits. Apparently, they don't need the deposits anymore, as they no longer accept new customers and started selling theirs via the sweep program.

https://hatchbank.com/

Image
If you torture the data long enough, it will confess to anything. ~Ronald Coase
jst
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Re: HM Bradley - is it safe - FDIC response

Post by jst »

Agreed that my days here are numbered. With Bask at 2%, this just doesn't make a lot of sense given the hoops.

I do wish I had a great way to use that 3% credit card reward, but without taxes and insurance, I just can't find anything amazing. But my wife and I each have these, so we might keep one when the fees come up.
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PicassoSparks
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Re: HM Bradley - is it safe - FDIC response

Post by PicassoSparks »

I'm pulling my money out. The 1% is less than a lot of actual banks, the CC isn't even available to jump through hoops for the 3% and I'm not sure that I care enough to jump through the hoops should it come back. There is enough confusion about the FDIC insurance (as customers of Voyager are learning) and I can't be bothered to learn the details of the pass through laws, should HMB fail in some way while Hatch remains solvent.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

PicassoSparks wrote: Mon Jul 25, 2022 8:48 am I'm pulling my money out. The 1% is less than a lot of actual banks, the CC isn't even available to jump through hoops for the 3% and I'm not sure that I care enough to jump through the hoops should it come back. There is enough confusion about the FDIC insurance (as customers of Voyager are learning) and I can't be bothered to learn the details of the pass through laws, should HMB fail in some way while Hatch remains solvent.
Can you share some more details on what's going on with Voyager?

Admittedly, it's not something I've paid attention to, and my quick parsing of https://www.bankingdive.com/news/fdic-p ... ce/626865/ comes out as:
  • They apparently failed to distinguish "cash" on deposit with their partner bank as FDIC insured, and instead seemingly implied that "all deposits" - including crypto - were protected by FDIC. (Which is obviously false/misleading... And while wrong and should be corrected, people that understand FDIC should know it doesn't extend to anything other than bamk deposits.)
  • Deposits in the partner bank are protected, and the money is held separate from Voyagers assets and not subject to creditors or "other" uses by Voyager.
  • Access to the funds could be restricted if Voyager were to fail, but my impression is people will get their cash deposits back.
What I don't know is does Voyager provide users a direct routing and account number, so they can push/pull funds directly (without being dependent on Voyager's app/website). To me that's a huge advantage of HMBradley. Conceptually, HMBradley could disappear tomorrow - and other then maybe a temporary freeze while things get sorted (which I'm OK with) - I can pull my money out without needing HMBradley.

My initial read is this does not seem like it exposed some new risk, or some missed flaw. Only cash deposited are insured (has always been that way). And access may temporarily be limited in the case of a failure of HMBradley and/or Hatch. That's been my working theory all along, and is my working theory for any bank (such as small banks/credit unions offering high rates as well).

But if I've missed something - I'd love to hear what it is!

And p.s. - if they aren't issuing you the credit card, and thus you can't get the 3% rate - definitely agree HMBradley isn't worth it for only 1%. Heck, they 7-day SEC yield is nearing 1.5% on a money market fund like FZDXX. And if rates get near 3%, I'll likely move out of HMBradley as well (although I'll keep my account open as a future option).
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PicassoSparks
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Re: HM Bradley - is it safe - FDIC response

Post by PicassoSparks »

Voyager is not the same at HMBradley, for sure. They claimed FDIC insurance and had all the customers $$$ in a different kind of account than HMB offers through Hatch. HMB is claiming FDIC through Hatch and we do each have our own account. But there is no customer-facing way to directly interface with Hatch. So if something goes wrong with HMBradley, who are NOT a bank but are the interface to the bank, I do not know what will happen with the ability to make transfers etc. And I value the liquidity of the money I have with HMB/Hatch such that I don’t want to have to learn the intricacies of whatever mechanisms will need to kick in, should HMB have a problem.

There is an uncertainty about WHAT exactly I am insured against and HOW that I’m sure — with a bit more investigation — I could work out, unless the general uncertainty is not just me and my lack of skill at reading the agreements but a larger uncertainty about how the banking system deals with these pass-through fintechs.

Voyager has failed and customers funds have been frozen since the start of the month. There is some hope that some will be unlocked depending on a bailout plan. https://fortune.com/2022/07/22/voyager- ... man-fried/

It seems that even the Voyager customers have a good chance of seeing their bank-deposited money back eventually. But the risk of “eventually” instead of “on demand” isn’t worth the very slight APR premium that HMB is offering.

When ordinary banks fail, it is nearly transparent to customers. Much less so when fintech fails.
https://bam.kalzumeus.com/archive/deposit-insurance/ <— nice overview of how FDIC plays out.
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

PicassoSparks wrote: Mon Jul 25, 2022 2:25 pm Voyager is not the same at HMBradley, for sure....
Thanks for the extra details!
PicassoSparks wrote: Mon Jul 25, 2022 2:25 pm They claimed FDIC insurance and had all the customers $$$ in a different kind of account than HMB offers through Hatch. HMB is claiming FDIC through Hatch and we do each have our own account. But there is no customer-facing way to directly interface with Hatch. So if something goes wrong with HMBradley, who are NOT a bank but are the interface to the bank, I do not know what will happen with the ability to make transfers etc.
With HMBradley/Hatch, since we have the routing and account numbers at Hatch, my working theory is we do not "need" HMBradley to access our funds.

Not sure if it was that way at Voyager, but that seems to be the primary difference I've seen with these...
PicassoSparks wrote: Mon Jul 25, 2022 2:25 pm ... larger uncertainty about how the banking system deals with these pass-through FinTech's....
Many FinTech's might be using an FDIC bank, but you have no direct access, and are forced to use their app and/or website to access your money. To me - that model isn't acceptable.

But with HMBradley, my money is sitting in an FDIC account that I can access directly (via ACH). That makes a world of difference to me...
PicassoSparks wrote: Mon Jul 25, 2022 2:25 pm Voyager has failed and customers funds have been frozen since the start of the month. ...

It seems that even the Voyager customers have a good chance of seeing their bank-deposited money back eventually.
I'd be curious to know if Voyager provided the routing and account number to the underlying bank like HMBradley does... Again my working impression is since HMBradley does provide this, it's less likely things would be frozen...

But I admit, less likely does not mean zero chance. It's entirely possible they'd need to freeze all accounts if HMBradley fails, if for no other reason than to shut off any access HMBradley had to those accounts. I'm OK if this money is locked up for a bit, personally I usually only pull any out (that doesn't go back in) once a year, and if that was delayed by a few months, definitely not going to impact me (so long as I eventually get my money back, which seems to still be a valid expectation).

PicassoSparks wrote: Mon Jul 25, 2022 2:25 pm But the risk of “eventually” instead of “on demand” isn’t worth the very slight APR premium that HMB is offering.
IMHO there is definitely a non-zero risk with FinTechs (even if you get your money back as I expect) if/when they fail (as you may end up with delays getting your money).

So if you can get similar or better rates elsewhere, by all means do so!

Again, for myself, I'm not seeing alternatives that are likely to pay 3% for the next two years (roughly how long HMBradley have been doing it). I'm hopeful (for lots of reasons) that inflation will eventually go back down, which assuming HMBradley sticks around will keep them as a long term option for me.

In other words, so long as my money is FDIC Insured, I have direct access to do ACH push/pull of my funds at Hatch, the "hoops" do not become burdensome, and the rates remain amoung the highest available (on large balances), I'll going to keep riding this horse... If/when those change, I'll switch horses...

If you are only able to get the 1% rate, I'm with you - definitely time to switch horses...
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

I have no worries about FDIC, Hatch bank is clearly FDIC covered and my funds are clearly in a Hatch bank account.

Having said that I’ve decided to largely drain it - put $20k more into giftbox ibonds, and the balance I’ll run through a couple of bank bonus accounts. I’ll probably leave the account open for the time being with nominal funds. I do have the credit card but may cancel before annual fee in December.
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Re: HM Bradley - is it safe - FDIC response

Post by Nuestroro »

Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

Nuestroro wrote: Mon Jul 25, 2022 7:23 pm Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
While I wouldn’t want to have to go through an FDIC bailout, the funds are clearly at Hatch bank. It is clear on the ACH transaction notations. As to clawback, while I’m not an expert on the matter I’d be shocked if bankruptcy clawback clauses applicable to debtors and vendors would apply to individual bank account holders. If you have specific examples of this happening with bank account holders please share, otherwise seems like you and others are just creating hypothetical and mostly non sensical scare tactics, to what ends I am not sure.
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PicassoSparks
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Re: HM Bradley - is it safe - FDIC response

Post by PicassoSparks »

It is pretty rude to describe people’s evaluation of the risks they see as “scare tactics” and then imply we are posting our opinions, “to what ends I am not sure.”
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

JBTX wrote: Mon Jul 25, 2022 7:40 pm
Nuestroro wrote: Mon Jul 25, 2022 7:23 pm Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
While I wouldn’t want to have to go through an FDIC bailout, the funds are clearly at Hatch bank. It is clear on the ACH transaction notations. As to clawback, while I’m not an expert on the matter I’d be shocked if bankruptcy clawback clauses applicable to debtors and vendors would apply to individual bank account holders. If you have specific examples of this happening with bank account holders please share, otherwise seems like you and others are just creating hypothetical and mostly non sensical scare tactics, to what ends I am not sure.
What Happened to Beam? Weren't they "FDIC insured" too?
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...

But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...

But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
But if HMBradley failed, would those accounts at Hatch Bank be frozen? I don't know what happens in that type of situation, but I would not assume having unfettered access to those accounts.
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

anon_investor wrote: Tue Jul 26, 2022 7:08 am
JBTX wrote: Mon Jul 25, 2022 7:40 pm
Nuestroro wrote: Mon Jul 25, 2022 7:23 pm Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
While I wouldn’t want to have to go through an FDIC bailout, the funds are clearly at Hatch bank. It is clear on the ACH transaction notations. As to clawback, while I’m not an expert on the matter I’d be shocked if bankruptcy clawback clauses applicable to debtors and vendors would apply to individual bank account holders. If you have specific examples of this happening with bank account holders please share, otherwise seems like you and others are just creating hypothetical and mostly non sensical scare tactics, to what ends I am not sure.
What Happened to Beam? Weren't they "FDIC insured" too?
No I don’t think so. Best I can tell Beam was completely different model.

There is nothing unusual about the Hatch Bank accounts other than the HMBradley wrapper. I don’t think it is materially different than T mobile money or the Fidelity investments cash/bank accounts.

Having said that I pulled out about $40k yesterday to redeploy to more productive uses.
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

JBTX wrote: Tue Jul 26, 2022 11:46 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am
JBTX wrote: Mon Jul 25, 2022 7:40 pm
Nuestroro wrote: Mon Jul 25, 2022 7:23 pm Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
While I wouldn’t want to have to go through an FDIC bailout, the funds are clearly at Hatch bank. It is clear on the ACH transaction notations. As to clawback, while I’m not an expert on the matter I’d be shocked if bankruptcy clawback clauses applicable to debtors and vendors would apply to individual bank account holders. If you have specific examples of this happening with bank account holders please share, otherwise seems like you and others are just creating hypothetical and mostly non sensical scare tactics, to what ends I am not sure.
What Happened to Beam? Weren't they "FDIC insured" too?
No I don’t think so. Best I can tell Beam was completely different model.

There is nothing unusual about the Hatch Bank accounts other than the HMBradley wrapper. I don’t think it is materially different than T mobile money or the Fidelity investments cash/bank accounts.

Having said that I pulled out about $40k yesterday to redeploy to more productive uses.
I thought HM Bradley sent out a communication saying they may use other banks. Do they tell you if the money is no longer at Hatch Bank?
SnowBog
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Tue Jul 26, 2022 11:40 am
SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...

But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
But if HMBradley failed, would those accounts at Hatch Bank be frozen? I don't know what happens in that type of situation, but I would not assume having unfettered access to those accounts.
In truth, I don't know as well... Which is why if anyone has any specific examples of someone with a similar model, I'd be very interested to know.

That said, my working assumption is I would continue to be able to withdraw my money from Hatch, even if HMBradley failed.

However, I've been clear that the possibility of having access to my funds temporarily halted is not zero. I'm not sure what those scenarios look like, but I'm sure there is some sequence of events that could cause my access to my funds to be delayed - potentially for weeks. As I have a small checking and savings account separate from HMBradley for cash flow management, and efficiently obit make 1x withdrawal from HMBradley a year that could easily be delayed by weeks or months without issues, that isn't a primary concern to me.

What remains my primary concern is if there's some gap that hasn't yet been shown where my money is at risk of being lost is HMBradley and/or Hatch failed. I've yet to see anyone show that risk exists*. But I've seen lots of people using FUD (Fear, Uncertainty, and Doubt) without substantiation.

For clarity, I accept nothing is "risk free" in life.
Whether in HMBradley, a local bank, or an account at a brokerage firm - there is always the risk of malfeasance by someone within the company or a hacker that could drain an account. I keep a close eye on my accounts, so if money goes missing I'll know quickly and start taking action.
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anon_investor
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

SnowBog wrote: Tue Jul 26, 2022 12:06 pm
anon_investor wrote: Tue Jul 26, 2022 11:40 am
SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...

But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
But if HMBradley failed, would those accounts at Hatch Bank be frozen? I don't know what happens in that type of situation, but I would not assume having unfettered access to those accounts.
In truth, I don't know as well... Which is why if anyone has any specific examples of someone with a similar model, I'd be very interested to know.

That said, my working assumption is I would continue to be able to withdraw my money from Hatch, even if HMBradley failed.

However, I've been clear that the possibility of having access to my funds temporarily halted is not zero. I'm not sure what those scenarios look like, but I'm sure there is some sequence of events that could cause my access to my funds to be delayed - potentially for weeks. As I have a small checking and savings account separate from HMBradley for cash flow management, and efficiently obit make 1x withdrawal from HMBradley a year that could easily be delayed by weeks or months without issues, that isn't a primary concern to me.

What remains my primary concern is if there's some gap that hasn't yet been shown where my money is at risk of being lost is HMBradley and/or Hatch failed. I've yet to see anyone show that risk exists*. But I've seen lots of people using FUD (Fear, Uncertainty, and Doubt) without substantiation.

For clarity, I accept nothing is "risk free" in life.
Whether in HMBradley, a local bank, or an account at a brokerage firm - there is always the risk of malfeasance by someone within the company or a hacker that could drain an account. I keep a close eye on my accounts, so if money goes missing I'll know quickly and start taking action.
I would think that money would not be lost forever, but I think there are a number of scenerios where money is inaccessable for a period of time. So having other sources of funds available is important. But I think the chances of losing immediate access to funds more than just a small possibility.
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Tue Jul 26, 2022 11:50 am I thought HM Bradley sent out a communication saying they may use other banks. Do they tell you if the money is no longer at Hatch Bank?
Fidelity does the same thing with their CMA funds. In Fidelity's case, their Hatch equivalent is UMB.

As I understand how the process works, both for Hatch and UMB, to me I don't "see" the sweeps - I just see my account at Hatch/UMB. The "sweeps" (as best as I understand them) are managed by the banks (Hatch in HMBradley case and UMB in Fidelity's), and are essentially inter-bank sharing of deposits.

More specifically, if I have $100k deposited to HMBradley, I have $100k available in my Hatch bank account. If they "sweep" $50k of that to another bank, it doesn't impact me as the entire $100k remains available to me to pull from Hatch (and Hatch handles any inter-bank transfers as needed). The same is true with Fidelity, they can give pieces of my deposit to whoever they want, but it's completely invisible to how I interact with them. And since they are all FDIC insured, no issues there.

For both Fidelity and HMBradley, there is a way to see what banks are being used for your funds. Can't recall if it's in the app, or if you need to contact support, but you can find out. I also believe that you can "block" specific banks from being used for your funds. This is only applicable if you happen to have an account directly with that bank, and the combined deposits of your individual account and any amount "swept" there would put you over FDIC limits.
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

SnowBog wrote: Tue Jul 26, 2022 12:16 pm
anon_investor wrote: Tue Jul 26, 2022 11:50 am I thought HM Bradley sent out a communication saying they may use other banks. Do they tell you if the money is no longer at Hatch Bank?
Fidelity does the same thing with their CMA funds. In Fidelity's case, their Hatch equivalent is UMB.

As I understand how the process works, both for Hatch and UMB, to me I don't "see" the sweeps - I just see my account at Hatch/UMB. The "sweeps" (as best as I understand them) are managed by the banks (Hatch in HMBradley case and UMB in Fidelity's), and are essentially inter-bank sharing of deposits.

More specifically, if I have $100k deposited to HMBradley, I have $100k available in my Hatch bank account. If they "sweep" $50k of that to another bank, it doesn't impact me as the entire $100k remains available to me to pull from Hatch (and Hatch handles any inter-bank transfers as needed). The same is true with Fidelity, they can give pieces of my deposit to whoever they want, but it's completely invisible to how I interact with them. And since they are all FDIC insured, no issues there.

For both Fidelity and HMBradley, there is a way to see what banks are being used for your funds. Can't recall if it's in the app, or if you need to contact support, but you can find out. I also believe that you can "block" specific banks from being used for your funds. This is only applicable if you happen to have an account directly with that bank, and the combined deposits of your individual account and any amount "swept" there would put you over FDIC limits.
If I ever had that much cash to go over FDIC limits, I would probably use a treasury money market fund instead or buy individual T-Bills.

I am not saying HM Bradley's set up is bad, but I am saying all those moving parts could mean loss of access to funds if something goes wrong. I think it is much more likely that HM Bradley fails than Fidelity.
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Tue Jul 26, 2022 12:12 pm I would think that money would not be lost forever, but I think there are a number of scenerios where money is inaccessable for a period of time. So having other sources of funds available is important. But I think the chances of losing immediate access to funds more than just a small possibility.
In general, I don't disagree. But I think the same is true of a local bank/credit union. There are scenarios that could impact your access...

In the world of FinTechs though, personally I will not do business with one that "forces" me to access my money through their app/website. (Actually, same applies to me for banks.). Some businesses fail - its part of life. But I don't want to be limited to that business's app/website, especially when we are talking about bank accounts which can be accessed via ACH.

Again, if HMBradley fails, baring some court order that temporarily freezes access to Hatch, I do not need HMBradley to get my money. Contrast that with Beam (or others), individuals had no way to access their funds, and were left at the mercy of Beam (which was actually at the mercy of letting processors reconnect them so they found refund money to people) - or if that failed - would have had to wait until the courts/regulators sorted it out. That should not be a problem with HMBradley...
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

anon_investor wrote: Tue Jul 26, 2022 12:21 pm I think it is much more likely that HM Bradley fails than Fidelity.
Not sure how that's relevant...

I think it's far more likely for a local/regional bank to fail versus Fidelity as well. I don't tell people not to bank there out of fear...

Whether that local bank fails, or HMBradley fails, or Hatch fails - other than the possibility of a temporary delay getting to my funds - there should be effectively no risk of losing the funds completely. That's the entire point of having money in an FDIC insured account.
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Re: HM Bradley - is it safe - FDIC response

Post by JBTX »

anon_investor wrote: Tue Jul 26, 2022 11:50 am
JBTX wrote: Tue Jul 26, 2022 11:46 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am
JBTX wrote: Mon Jul 25, 2022 7:40 pm
Nuestroro wrote: Mon Jul 25, 2022 7:23 pm Remember FDIC insurance only applies if the bank fails. If the intermediary fintech fails, you’ll be waiting for a long time to get your cash. Bankruptcy is a slow process.

It might feel nice being able to pull your money via ACH, but that won’t stop the fintech’s bankruptcy trustee from trying to claw the money back as a fraudulent conveyance. Yes, you might be able to convince a court the money was really yours all along and shouldn’t be part of the bankruptcy estate. But that’s a hassle or (if you hire a lawyer) expensive. Worst case, the fintech titled the bank accounts incorrectly and the money isn’t legally yours.

Relatedly, even if the bank fails and the FDIC swoops in, you’re still relying on the fintech to have titled the accounts properly to qualify for pass-through insurance. You have no way of verifying that’s true. If the fintech screws up and the FDIC decides the fintech gets $250K total (not per client) than expect to not get 100 cents on the dollar.

To me, the extra 1-2% on my deposits isn’t worth the uncertainty. There’s no free lunch. If the yields are higher, you’re taking more risk somewhere.
While I wouldn’t want to have to go through an FDIC bailout, the funds are clearly at Hatch bank. It is clear on the ACH transaction notations. As to clawback, while I’m not an expert on the matter I’d be shocked if bankruptcy clawback clauses applicable to debtors and vendors would apply to individual bank account holders. If you have specific examples of this happening with bank account holders please share, otherwise seems like you and others are just creating hypothetical and mostly non sensical scare tactics, to what ends I am not sure.
What Happened to Beam? Weren't they "FDIC insured" too?
No I don’t think so. Best I can tell Beam was completely different model.

There is nothing unusual about the Hatch Bank accounts other than the HMBradley wrapper. I don’t think it is materially different than T mobile money or the Fidelity investments cash/bank accounts.

Having said that I pulled out about $40k yesterday to redeploy to more productive uses.
I thought HM Bradley sent out a communication saying they may use other banks. Do they tell you if the money is no longer at Hatch Bank?
I don’t know if they did or not. However fidelity cash mgt account absolutely does.

https://www.fidelity.com/cash-managemen ... t/overview

The Fidelity® Cash Management Account's uninvested cash balance is swept to one or more program banks where it earns a variable rate of interest and is eligible for FDIC insurance. At a minimum, there are five banks available to accept these deposits, making customers eligible for nearly $1,250,000 of FDIC insurance. If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be higher or lower. For more information on FDIC insurance coverage, please visit www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Refer to the FDIC-Insured Cash (Core) Disclosure Statement and list of eligible Program Banks for details. The deposits at Program Banks are not covered by SIPC.
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Re: HM Bradley - is it safe - FDIC response

Post by anon_investor »

SnowBog wrote: Tue Jul 26, 2022 12:32 pm
anon_investor wrote: Tue Jul 26, 2022 12:21 pm I think it is much more likely that HM Bradley fails than Fidelity.
Not sure how that's relevant...

I think it's far more likely for a local/regional bank to fail versus Fidelity as well. I don't tell people not to bank there out of fear...

Whether that local bank fails, or HMBradley fails, or Hatch fails - other than the possibility of a temporary delay getting to my funds - there should be effectively no risk of losing the funds completely. That's the entire point of having money in an FDIC insured account.
If a regular bank fails with FDIC insurance, the way it is handled it usually is seemless for the customer, often never with a loss of access to funds (accounts transfered to another bank, etc.). There are concrete real life examples of this. I think with these neobanks, there are less real life example of what would happen.

If HM Badley shuts down (this could happen without warning), what would happen? No one here knows. Will Hatch account access be frozen? For Fidelity, we also do not know what would happen, but there is little chance that Fidelity would shut down without warning signs.
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Re: HM Bradley - is it safe - FDIC response

Post by nisiprius »

SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...
They used language that would lead anyone but a nit-picker to believe they were. As with all of these we-provide-banking-but-we're-not-a-bank fintechs, they said something like "your deposits are held in an FDIC-insured account."

Sorry, erroneous, so I've struck it out:
But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
As a practical matter, this is a very meaningful difference. But there's a problem. Maybe a nitpick, maybe not.

Based on forum postings, the ability to identify your own account at Hatch Bank and transact directly, without HMBradley's intervention, is simply a discovery, an observation, an undocumented feature. HMBradley may conceivably not even know it is happening. Technically it might not even be authorized. In any case, they don't promise you can do it, and they could probably block that capability at any time.
Last edited by nisiprius on Tue Jul 26, 2022 9:12 pm, edited 1 time in total.
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

nisiprius wrote: Tue Jul 26, 2022 1:28 pm
SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...
They used language that would lead anyone but a nit-picker to believe they were. As with all of these we-provide-banking-but-we're-not-a-bank fintechs, they said something like "your deposits are held in an FDIC-insured account."
On this point - this is sage advice!!

I think skepticism is healthy, and people need to research beyond a "marketing" statement - to validate things are being done as they said they were supposed to be done.

And in the case of HMBradley - I feel like we've done that - and thus far - they seem unique in that they by all accounts appear to be doing things in a manner that actually supports the marketing statement.
nisiprius wrote: Tue Jul 26, 2022 1:28 pm
But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
As a practical matter, this is a very meaningful difference. But there's a problem. Maybe a nitpick, maybe not.

Based on forum postings, the ability to identify your own account at Hatch Bank and transact directly, without HMBradley's intervention, is simply a discovery, an observation, an undocumented feature. HMBradley may conceivably not even know it is happening. Technically it might not even be authorized. In any case, they don't promise you can do it, and they could probably block that capability at any time.
We've covered this ground before... But it is not an "undocumented" feature... This is part of their model... Admittedly, they'd rather have you use their app/website - but again they are IMHO super transparent about how things are setup including providing you access to the Hatch account details right from within their app.

From their FAQ pages: https://faq.hmbradley.com emphasis mine...
How do I fund my deposit account?
There are three ways you can fund your HMBradley Deposit Account:

Direct deposit
ACH transfer
Mobile check deposit
Are wire transfers compatible with my HMBradley Deposit Account?
Yes, you can receive incoming wire transfers to your HMBradley Deposit Account. There is no fee to receive a wire. You will need to provide your account and routing numbers to the originating financial institution (the bank where the wire is being sent from). This information can be found on your HMBradley Account Details page. You will also need to provide the originating financial institution with the following address for Hatch Bank. See "Who is Hatch Bank".
And this transparency, and well documented capability, is why I have the level of "trust" that I have. That again isn't to say that I think HMBradley can't fail, or that there couldn't be disruptions... But given that the funds are ultimately on deposit in an FDIC insured bank, with the bank actually handling the custodial accounts (aligned to FDIC expectations), my understanding is I have the same protections as I'd have at any other bank (which could also fail). And given that HMBradley is not Hatch (and vice versa), should HMBradley fail, it will have no impact on that protection (which is provided by Hatch), and may not even disrupt my access (I'm authorized to withdraw my funds from Hatch - so baring a court order for them to temporarily freeze access - I can continue to do so even if HMBradley no longer exists). The only realistic risk I can think of is if someone within HMBradley "stole" my money - but again that same risk exists within a bank - so it not unique to HMBradley...

Again - skepticism is a good thing! But throwing FUD out doesn't change the results. Thus far, no one has been able to provide anything that has invalidated the understanding that money deposited to HMBradley (which is ultimately deposited to Hatch and/or their partner banks) is protected by FDIC insurance.
What does it mean when you say that “Funds in my HMBradley Account will be titled in Hatch Bank’s name [or the name of its agent] as custodian and beneficially held to provide deposit insurance coverage to [me]”?
Hatch Bank will hold your funds, and the funds of other HMBradley Account customers, in a Network Bank for your benefit and the benefit of the other HMBradley Account customers. This way, you and the beneficial owners are insured by the FDIC or the NCUA up to the maximum (currently $250,000) per depositor. FDIC insurance of accounts passes through to the actual account owners (you and the other HMBradley Account customers as beneficial owners). This way, the FDIC can appropriately determine insurance coverage. Hatch Bank and their third-party service provider(s), maintain the list of beneficial owners of the custodial account.
Edited for typos and restructured for better clarity.
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Re: HM Bradley - is it safe - FDIC response

Post by patrick »

nisiprius wrote: Tue Jul 26, 2022 1:28 pm
SnowBog wrote: Tue Jul 26, 2022 11:12 am
anon_investor wrote: Tue Jul 26, 2022 7:08 am What Happened to Beam? Weren't they "FDIC insured" too?
I don't know if Beam claimed to be FDIC insured...
They used language that would lead anyone but a nit-picker to believe they were. As with all of these we-provide-banking-but-we're-not-a-bank fintechs, they said something like "your deposits are held in an FDIC-insured account."
But I do know that they did not provide routing and account details so people could access their funds directly. The only access was through the Beam app/website. So when Beam shutdown the app/website, everyone was looked out of their money.

But even there, as far as I'm aware, Beam users were eventually able to get their money out. https://www.cnbc.com/2021/02/02/embattl ... h-ftc.html Since Beam controlled everything, looks like they had to get temporary access restored to let refunds process. But the money appears to have been returned (eventually).

Again, this is a fundamental difference I see with HMBradley, that so far I've not seen from other FinTechs. In a Beam type failure, I do not need HMBradley to access my money, I can simply pull it directly from my individual account at Hatch Bank.
As a practical matter, this is a very meaningful difference. But there's a problem. Maybe a nitpick, maybe not.

Based on forum postings, the ability to identify your own account at Hatch Bank and transact directly, without HMBradley's intervention, is simply a discovery, an observation, an undocumented feature. HMBradley may conceivably not even know it is happening. Technically it might not even be authorized. In any case, they don't promise you can do it, and they could probably block that capability at any time.
As best I can understand the media reports, Beam did in fact keep customer funds in an FDIC-insured account. They just didn't provide adequate access to withdraw from that account.

HMBradley's site makes it easy to see the account number and routing number, the latter of which is Hatch Bank's routing number. HMBradley's terms at https://policies.hmbradley.com/deposit/ ... eement.pdf include the following:

"You may authorize a third party to transfer funds to (direct deposit) or from (preauthorized EFTs) your HMBradley Account by providing the third party with your account number and our routing number."

HMBradley also sends out debit cards marked "issued by Hatch Bank" and using Hatch Bank's IIN.
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

patrick wrote: Tue Jul 26, 2022 5:24 pm HMBradley also sends out debit cards marked "issued by Hatch Bank" and using Hatch Bank's IIN.
I had completely forgotten this! :oops:

But yep, the card is likely sitting in my safe with the other cards I have but don't use regularly...
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Re: HM Bradley - is it safe - FDIC response

Post by Nuestroro »

I am a fintech lawyer. (Though not yours and I’m not providing legal advice for your specific situation.) The law is this area is not clear. The largest white-shoe law firms aren’t willing to give a legal opinion on what will happen. We’ve asked.

My motive is simply to educate and help people avoid financial distress. Please assume fintech deposits could become locked up for a year.
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Re: HM Bradley - is it safe - FDIC response

Post by SnowBog »

Nuestroro wrote: Tue Jul 26, 2022 6:07 pm I am a fintech lawyer. (Though not yours and I’m not providing legal advice for your specific situation.) The law is this area is not clear. The largest white-shoe law firms aren’t willing to give a legal opinion on what will happen. We’ve asked.

My motive is simply to educate and help people avoid financial distress.
Nuestoro - can you be more specific? I completely understand if you can't and/or aren't willing to be...

To perhaps give some context, when I first started researching this - there definitely seems a "gray area" when a FinTech does not provide you your own "bank" account - as appeared to be the case with some like Beam. Reading through the FDIC fine print, the accounts needed to be titled and managed in a specific way for a given person to be FDIC insured. And the early ones I looked at - there was no information that gave any specifics about how they achieved FDIC insured coverage. Or it was a generic marketing statement like "deposits held at an FDIC insured bank" - which does not actually mean my individual account was FDIC insured - just the "bank in general" was...

Maybe I've misunderstood and/or are misreading the situation, but again my impression is HMBradley's model of working with Hatch, who establishes an account for every individual, and for which you have the account detail numbers - seemed like it was done in a way to achieve FDIC insurance. Are you saying that is incorrect and/or unknown (specific to HMBradley)? And if incorrect/unknown - based on what? What is the area that's still not clear?
Nuestroro wrote: Tue Jul 26, 2022 6:07 pm Please assume fintech deposits could become locked up for a year.
I'm assuming there's probably a spectrum of outcomes ranging from no impact (for an HMBradley type model), to some impact (weeks), to major impact (months), to massive impact (up to a year)?

Mentally, I've always been prepared for months delay if it ever came to that (I'm still optimistic it won't - but we live in a reality where things can fail). I'm not sure "a year" changes anything for me currently - as the way I'm using this account - that wouldn't be a major problem for me. I'd be more concerned if you said it could take years to sort through...
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Re: HM Bradley - is it safe - FDIC response

Post by nisiprius »

SnowBog wrote: Tue Jul 26, 2022 4:42 pm We've covered this ground before... [HMBradley's direct access to Hatch bank accounts] ... is not an "undocumented" feature...
Apologies, I struck out the relevant part of my posting above.
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