>the government clearly would have no problem coming up with the funds to backstop depositors since this is an isolated incident.

If you start bailing out banks which take risks, then the incidents become less isolated

Once you're handling millions of dollars you absolutely should be looking into counterparty risk when you deposit funds. Baffling that people are arguing business owners should do no due diligence on a bank or take no insurance.

https://en.wikipedia.org/wiki/Moral_hazard