[mindslight]

> if it [unlimited FDIC protection] was effectively already happening, doing it officially would change nothing of substance

Except that it's widely believed that depositor bailouts still only apply to "too big to fail institutions", and if this had been a smaller bank with less politically important depositors, the FDIC might have said too bad.

Furthermore the main point of my original comment is that making it explicit gives the FDIC a reason to assess insurance premiums on all accounts in proportion to their explicitly acknowledged risks (which are non-linear!), rather than continuing to collect smaller premiums under the belief that they only have to cover small accounts, while often ending up covering larger ones.

If those insurance premiums get too onerous for large accounts, then that creates a preemptive incentive to split up accounts and/or look at other non-bank financial custodians (decreasing FDIC's exposure either way).