[komali2]

This seems to be a core argument for those in opposition to shareholders getting liquidated bank assets vs depositors, but I don't really understand it because it seems to be kind of arbitrary. So there's fdic insurance, that's nice, but why does that mean anything regarding whether depositors or investors should be made whole first? The more important and real question is which option has what outcomes in terms of future investor behavior, or future depositor behavior?

If it's a question of rigid legality that also doesn't make sense to me, because from what I remember from 2008 was the government's legal options were incredibly widespread.

[stephen_g]

Shareholders are paid last by law. So if depositors are not made completely whole, shareholders don’t get anything.

1. https://www.fdic.gov/consumers/banking/facts/priority.html

[hyperpape]

FDIC insurance covers protecting depositors if a bank fails. I don’t see how you could interpret that as allowing anyone to give money to investors.