The people who run the Securities Insurance Protection Corp. (SIPC) must have a strange definition of insurance. SIPC, which is privately run but owned by us, provides insurance for brokerage accounts. Each account is insured up to $500,000. So, if, for example, the Madoff brokerage went belly up, SIPC would cover some of the loss. As we know, this is not quite the case; this is probably due to the supposed size of the claim. But the fact that the annual insurance premium is the grand sum of $150 per year no matter who the brokerage firm is may have something to do with it, as well. Further, SIPC covers only cases where the broker did not serve as a proper custodian.
How SIPC managed to amass a fund of $1.7 billion charging these premiums baffles me, but that's what they claim their fund has. And they can get another $1 billion from us via the Treasury.
One more case of an agency that seems to have existed primarily to employ people.
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