[pharmakom]

This is a monumentally bad idea.

If there is infinity backstop, I will simply create a bank and lend millions to my friends and promptly go bust. They get paid out by the government and I walk away. They do the same for me. We laugh at the poor taxpayer who foots the bill.

[Kye]

This won't happen for the same reason people most don't just burn their house/business down for the insurance payout. People lose insurance all the time this way even if they're just unlucky. Like any insurance company, the FDIC can and will drop a bank and isn't obligated to insure a new one if it's run by unreliable people.

[pharmakom]

Insurance fraud is illegal. Running a bank on the edge can be done legally.

[Kye]

What you described would be insurance fraud. FDIC is insurance. It's the I in FDIC.