Funds deposited in bank lent out to other customers. Bank assets are invested into loans, which vary in their degree of liquidity.

Bank pays into FDIC insurance fund.

A family with:
Joint checking account  $100,000
IRA for spouse 1               $100,000
IRA for spouse 2               $100,000
Insured for                          $300,000

The last scenario to look at is accountholders affected by bank mergers.

Let’s take the merger of Washington Mutual and JP Morgan Chase as an example.

A family with:
Joint checking account $100,000 at Washington Mutual and a joint checking account $100,000 at JP Morgan Chase would result in just $100,000 total coverage after the merger of the banks.

National Financial Services has paid for unlimited secondary insurance via the Customer Asset Protection Company (CAPCO), which covers accounts above $500,000 in assets.

Client funds are segregated from company assets. Client cash and securities must be held for the sole use of the client (unless held on margin, which has restrictions as well).

SIPC values client assets based on monthly statements but will correct any errors based on these statements if the client furnishes proof.

Large brokerage firms began using high levels of leverage when investing their own company funds in about 2003. Previous decades (1970s–1990s) did not see use of much leverage. Discount brokerage firms such as Fidelity do not invest their own capital in the stock market the way Bear Sterns, Lehman Brothers, and Merrill Lynch did. Fidelity follows a fundamentally more conservative business model.