[cperciva]

This means that, if for instance BofA or JP Morgan Chase fails (that'd never happen, right?) that the liabilities alone of these banks are already 20x to 40x bigger than the entire FDIC fund.

Note: If BofA or JP Morgan Chase went bankrupt, it wouldn't necessarily mean that they have zero assets. More likely they'd be able to pay 99 cents on the dollar and the FDIC would pay the last cent.

[arethuza]

"More likely they'd be able to pay 99 cents on the dollar and the FDIC would pay the last cent."

How long would that take take and what about the overheads of winding up a bank? Also, what about the ranking of different kinds of creditors - depositors would only be kind of creditor if a bank was wound up?

[pyalot2]

The 2008 collapse saw initial bailouts of $500b.

A subsequent $700b was approved and executed, and later on over $7t where commmited (but not all used) for bailouts.

That easily puts the bailouts that banks needed in order not to go under at $2-3t. That's nearly 40-60% of depositor liabilities.

If the bailouts don't happen if JP or BofA go under (for whatever reason), then I don't think the 99c to the dollar theory holds up.