Certificate of Deposit Account Registry Service - CDARS

Let’s say that you’re really rich and you really, really like the U.S. dollar. And we’re not talking like “Hey, there’s Jack, he’s got $2 million dollars. Maybe that cheapskate will buy me a drink one day.” No...we’re very rich. Maybe you could “buy the cheapest and worst team in the NHL” rich. Something like $750 million.

Stick with us.

Now, let’s say that you want to put all of that $750 million into one single bank. And let’s say it’s a really crappy bank. One run by really terrible bankers. Bankers who have no clue what they are doing or understand the basics of banking or even what banks even do. We’ll make up a name for this crappy bank. How about...Bank of America?

So...you're going to put all of your $750 million into Bank of America. But that's dangerous, because the FDIC only allows each member bank protection of up to $250,000 per customer. So, if this bank were to fail and you’ve got $750 million in this crappy, fictitious bank with a terribly fake name like Bank of America, you’re going to lose a lot of money. All of it, really. The FDIC would only be able to give you back that quarter of a million dollars.

But what if there were a magical way to spread all of that $750 million across all 3,000 of the FDIC’s member banks in the country? You could have $250,000 protected dollars in every single one of the 3,000 banks in the country. Wouldn’t that be an incredible service if it existed?

For some reason, it actually does exist. It’s called the Certificate of Deposit Account Registry Service (CDARS). The entire premise of this for-profit service sounds like it was invented by a guy who cared more about hiding money from multiple ex-wives than he did about protection from bank failure.

CDARS can break large amounts of deposits and spread them all across America, like a Monopoly Man dressed in a stork outfit with time-traveling capabilities. Not only that, but the customer’s local bank will set the interest rate for the entire amount of this deposit. And what’s even more interesting is that they can do it all with one bank statement. So, you can see the results of your money on one glossy piece of paper. But if you actually want to see your money, then pick up a Bentley and hire yourself a driver.

Visiting 3,000 FDIC banks by car sounds like what hell would have been like for Hank Paulson in the afterlife if he didn’t save the U.S. economy from the brink of disaster.