Neobanks and other third parties can legitimately have pass through FDIC insurance: https://www.fdic.gov/financial-institution-employees-guide-d...

The problem is that the FDIC isn’t stepping in because they claim they can only do so when there is a bank failure, not a failure at the third party. So they’re claiming that clients of the third party have to go through the bankruptcy proceedings, rather than just getting covered by the FDIC, whereas most clients are expecting the FDIC to protect funds in all situations not just a “bank failure”: https://www.fdic.gov/consumer-resource-center/2024-06/bankin...

Another problem is that in some of these setups, the third parties are not managing separate accounts for each client at the underlying bank. So the underlying bank is not maintaining records that track each client’s separate funds. To me that seems odd and I would expect neobanks to track those numbers themselves but also for the underlying bank to do so. The FDIC is working on making that a hard requirement: https://www.fdic.gov/news/press-releases/2024/fdic-proposes-...