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It just strikes me strange that they're like this. I don't have my CD's and MMA's in non-FDIC insured banks, so why do I need just trust VG to be doing the right thing?

Hi SF,

I think the FDIC insurance at banks was first instituted to protect the 'little guys' from losing their life savings (which usually amounts to less than $100K), hence the $100K 'ceiling'.

My understanding (not based on any 'facts', but just assumed) is that accounts at investment/brokerage houses are not insured. My assumption was always that those who have enough money to risk in 'investments', have enough money to assume the risk of non-insured loss.

I'm not even sure that the insurance on brokerage accounts covers 'fraud', but I don't know. I do know that many years ago during the great 'salad oil swindle', investors would have lost a lot more, but American Express decided to make good on most of the investor losses, but THEY WEREN'T REQUIRED TO DO SO. I believe one or two brokerage houses went under at that time.

I have heard several times in the past that this is a good reason NOT to keep all your mutual fund holdings at one brokerage house, or in one fund family. Disclosure: I currently hold mutual funds at both Fidelity and Vanguard.

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