I checked a bank in the CDARS network yesterday, which had a good rating from bankrate.com. The scheme seems like a good idea, but I was put off by the fees, which you can either pay or the bank pays giving you a lower rate. I also couldn’t find if CDARS is regulated, and since they don’t leave any contact details on their website (another minus in my book), I couldn’t really ask them. Most of the banks in the network are small, and although you can ask not to have you funds placed with certain banks, you can’t specify which ones you do want. The banks are apparently vetted by some FDIC solvency test. A similar scheme exists for Money Market funds. I think I’m right in saying the FDIC “watch” list grew 30% last month, and I still haven’t been able to find a leaked document of those banks on the internet.
