[jkhdigital]

And where does the government get the money to lend to the bank? Right, it issues Treasury debt for which it pays a market-determined rate of interest. In other words, taxpayers would be subsidizing any below-market rate loans.

[twblalock]

The FDIC also has lots of money, and got none of it from taxpayers.

[samstave]

Doesnt the Fed receive interest on bonds/money 'loaned to the government' - but any profits are then sent to the Treasury?

So if the taxpayers are paying interest to the fed, who then feeds those profits back to the trasury, and the treasury uses that money for scenarios such as this - doesnt that automatically mean the treasury/FDIC is using BOTH public taxpayer money (laundered through the fed back to the treasury) AND the bank payments to the FDIC in order to cover that?

Are these two separate piles of money - and they will not take from the "profits" the Fed made on taxpayer debt on money printed by the Fed to the USG, but only from the FDIC fund that the banks pay fees to?

Something always feels 'fishy' when you dont have a deep grasp of the structure... so, please ELI5?