Posted on 11/25/2024 1:46:17 AM PST by EBH
For 15 years, former Texas schoolteacher Kayla Morris put every dollar she could save into a home for her growing family.
When she and her husband sold the house last year, they stowed away the proceeds, $282,153.87, in what they thought of as a safe place — an account at the savings startup Yotta held at a real bank.
Morris, like thousands of other customers, was snared in the collapse of a behind-the-scenes fintech firm called Synapse and has been locked out of her account for six months as of November. She held out hope that her money was still secure. Then she learned how much Evolve Bank & Trust, the lender where her funds were supposed to be held, was prepared to return to her.
“We were informed last Monday that Evolve was only going to pay us $500 out of that $280,000,” Morris said during a court hearing last week, her voice wavering. “It’s just devastating.”
Snip
Synapse helped fintech startups like Yotta and Juno, which are not banks, offer checking accounts and debit cards by hooking them up with small lenders like Evolve.
But what is now clear is that regular Americans like Morris are bearing the brunt of that shortfall and will receive little or nothing from savings accounts that they believed were backed by the full faith and credit of the U.S. government.
The losses demonstrate the risks of a system where customers didn’t have direct relationships with banks, instead relying on startups to keep track of their funds, who offloaded that responsibility onto middlemen like Synapse.
(Excerpt) Read more at cnbc.com ...
Feel bad for them, but they gambled and lost.
Should have bought a house with the 200K.
Or something.
Greed.
Evolve Bank & Trust, formerly First State Bank,[4] is an American bank headquartered in West Memphis, Arkansas. It is best known since 2010 for partnering with fintech companies to offer banking services to their customers.[3] Evolve has been recognized multiple times as an Inc. 5000 company[5] and has also received several honors from Top Workplace USA.[6]
https://en.m.wikipedia.org/wiki/Evolve_Bank_%26_Trust
I will not use a digital bank such as a fintech.
Customers think they are FDIC insured by the weaselly language used by fintechs. They’re not and the customer doesn’t think to ask anyone directly or research the issue.
I use a credit union and a small local bank that’s been in our county for decades. We only have two banks here so they are referred to by the small town they are located in rather than by their official name. “Small town bank” and “smaller town bank”.
What good is FDIC insurance if the Government is bankrupt? It is already way beyond bankrupt.
I had a client lose over $1 million when a California bank that paid very high CD rates folded. No FDIC insurance.
I see a lot of young people using these types of “banks.”
They often pay a higher yield, marketing language that sounds like FDIC insured, and they actually are not.
In the article they refer to the company as if it not made up of people who made decisions. Someone did something with the funds. Who? It seems to me that someone (or their computer) would have to have the daily records of transfer of funds and where those funds ended up.
Money doesn’t just go out of an account without a record of where it went and what bank or account it landed in. It would take time, but an audit of credits and debts would eventually track down the money. Those in charge should be arrested for theft of funds and made to provide banking records to tell where the money went after being deposited by customers.
BTTT
I agree, it sounds criminal.
EBH - Yotta is not and never has been a “bank”.
it is “yotta savings” - a non-banking-financial-services company. So not under FDIC.
It probably gave a better savings %, but it was not a bank.
An online BANK that has to follow FDIC is fine, but even for me, I keep my money in brick&mortar banks.
Evolve is, as I read it, just a service provider to the yotta company.
Never heard of Fintech...not into any digital currency either. Been with the same small credit union for 42 years.
What’s the difference between medicare, SS, military, border patrol funding and this if it’s all bankrupt money?
You do know we’re running a 2 to 3 trillion dollar deficit every year, right?
You should know that they just print more.
Like they do for all the things that are in the budget already.
Never heard of it until now.
Fintech, a clipped compound of “financial technology”, refers to the application of innovative technologies to products and services in the financial industry. This broad term encompasses a wide array of technological advancements in financial services, including mobile banking, online lending platforms, digital payment systems, robo-advisors, and blockchain-based applications such as cryptocurrencies.[1] Fintech companies include both startups and established technology and financial firms that aim to improve, complement, or replace traditional financial services.
https://en.m.wikipedia.org/wiki/Fintech
There’s an old adage about ‘fools’, ‘money’ and ‘parting ways’... But why bother.
Anybody who would take their life savings and put them in anything other than very safe bonds, or some sort of ‘secure’ investment scheme with a ‘reputable’ financial organization (they aren’t that difficult to find), is flabbergasting.
Even after doing the above... You could lose it all, but at least you didn’t give it to something called Synapse fintech and lose it all. Doh!
Higher interest rates always means higher risk. It’s hard for consumers to understand how much additional risk they are assuming for an additional couple of tenths of a percent.
Also, how is the bank paying the higher rates? Capitol Bank pays a couple of percent on its savings accounts, but look at it’s balance sheet, it is lending that money to credit card holders who are paying 15-30%. I’m sure they have risk managers calculating just what the default rate is, but like the mortgage crisis, these guys make mistakes.
Another place of high risk is annuities. Promising high rates of return, sometimes they can’t deliver. Colorado Life recently went insolvent, putting retirees savings at risk.
The government will always be bankrupt, we operate in a debt based system.
The difference between the government and everyone else is they...THEY... can print more money until no one wants to buy our bonds.
We thought Janet was Ms. Zurp to Powell’s Mr. Burr. Just wait...you ain’t seen nothing yet!!
Honestly, with everything happening in the world, I really feel for President Trump’s first 120 days in office. Unfortunately I think the can cannot be kicked anymore, it’s flattened.
You are exactly right.
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