More and more Americans are gaming the deposit-insurance system

Imagine you are the dealer at a vast card table. There are 3,000 players, each of whom is holding a different number of cards. Some have thousands; others a handful. Each will hold onto some cards and return the rest to you. Your job is to reshuffle the deck and deal it again such that each player has the same number of cards they held before, but none of the same ones they handed over. At any point a player might recall a specific card it once held.It is a nightmarish task for a poor human shuffler, but a trivial one for the whizzy algorithms that govern the business of managing “reciprocal deposits”, in which a bank places deposits with another and receives the same value back, via a few mostly unknown technology firms. These quiet giants of financial plumbing reallocate enormous amounts of deposits. Around $1trn-worth are reshuffled through the platforms, of which about a fifth are swapped in reciprocal arrangements. This is a sizeable slice of the $18trn in total deposits parked with American financial institutions at the end of last year.