[peyton]

I don’t follow the math. A bank failure is a bank failure. There’s no difference to the FDIC between 100 depositors with $250k swept across 100 banks and 1 depositor with $25m.

[salawat]

If that one depositor with 25m banks only at the bank that fails, FDIC is on the hook for all 25m.

If the deposit is 250k across 100 banks, and only 1 bank fails, FDIC is only on the hook for at most the 250k.

Now multiply that by number of depositors. It's RAID for banks. You're gaining fault tolerance by decreasing the impact of any particular failure.

[mercyandgrace]

>It's RAID for banks.

Just wanted to say this is such a great analogy. Thanks.