Why aren't they asking to add another FDIC level with the maximum insured amount at e.g. $5m and increase insurance premiums for banks accordingly? That'd take care of it, if you have $5m in cash and want to put it into a bank account, you just pay more fees, the bank pays a significantly larger insurance premium and everyone lives happily ever after.

This feels like an Ethereum thing. Code is law, but not if it's inconvenient.

There's nothing stopping _you personally_ from purchasing insurance on your $5m at the bank from an insurer (or reinsurer) instead of socializing the cost of insuring higher-valued accounts on everyone else.

The one thing that mandatory FDIC insurance gives you over purchasing private insurance is a) the US Government is guaranteed to not go bust (and if it does, we're all living off canned goods anyway) and b) you avoid the situation where people don't do the responsible thing and then you have to bail them out anyway (this is also part of the argument behind government provided healthcare insurance, but that's another topic for another day)

Buying private insurance leaves you open to the risk of the insurance company going bust, and, it not being mandatory means people can take the risk and then come crying to the US Treasury to solve this unknowable systemic risk that everyone actually does know about--which we're already seeing heavy pressure from people to bail out these depositors who are above the insurance limits

Yeah people keep saying that but as far as I can tell from googling, there's no such thing as buying supplemental insurance for your bank account. Can you link an insurer that offers that?

If I had a personal account from my wage earnings and handful of profitable trades at Wells Fargo, my modest account would be reasonably protected through mandatory insurance and I would know that because of the FDIC sticker on every fricking window and website.

On the other hand, if I managed a large liquid asset portfolio and I considered having Wells Fargo provide banking services, I would know that my deposits would not be implicitly insured and that any substantial deposits were more like a loan to the bank, subject to their own illiquidity and insolvency. Because that's how banks work, except for the specific carve-out for small accounts. Thus, I would practice risk management suitable to my needs by vetting my bank(s) practices, diversifying my holdings, buying private insurance, or just hiring a professional who I could entrust to manage those things for me. Thankfully, because I have a large liquid asset portfolio available, I can afford to do that.

So at the end of the day, any large deposit I make with Wells Fargo is actually a risk-laden investment that I've made a calculation to play, just like that equity share that you bought on the stock market.