[tetrahedr0n]

I might be missing something, but not sure why this was downvoted.

Deposits <$250k are FDIC insured. One could say those accounts didn't evaluate the institution that held their funds and didn't really need to. But were they aware of FDIC limits? IMHO, they should have been and likely were.

Depositors >$250k are well aware of FDIC and the risk associated with money in their bank. They really should think about the banks they work with and understand their risk profiles.

Subjective, but I understood how FDIC worked when I opened my first bank account that was no where close to 250k. If it was greater, I would optimize my holdings across different institutions and instruments.

[eru]

Yes. Though as a normative statement, I would prefer if they would abolish FDIC.

That way small time depositors are also drawn into the ranks of the watchmen of the financial system.

[tetrahedr0n]

In a more perfect world, I totally agree. But with American average savings so low and with the average level of financial literacy so low, expecting half of America to join the ranks of financial system watchmen is, IMHO, a tough hill to climb.

[study on financial literacy from 2022](https://gflec.org/wp-content/uploads/2022/04/TIAA-Institute-...)

[eru]

People now ain't stupider than in the past. And banking systems around the world (apart from the US, probably) did just fine without government backed deposit insurance. Eg in Canada or Scotland during their free banking eras.