This. No one lost money by depositing their money with goldman sachs (they were not a deposit accepting institution). People lost their money speculating on stock and real estate. Having their money in a slightly safer bank would not have helped.

It's marketing. That's all.

Except that there've been rumors swirling regarding the FDIC's solvency for a while now. People no longer confident in the government's bailout ability would be comforted to hear there's an option where much more of their money will be physically retained.

Not that the government will let the FDIC fail. They'll just inject new money endlessly to prevent it.

Remember that the FDIC is not funded by the government - it is funded by premiums that banks pay to get their "insurance". In this model SafeBank would have to pay a premium to the FDIC to get that insurance and as many small banks have found recently (when the premiums went up) those premiums are not insignificant. That's not to say that the government would not bail out the FDIC but to date there has been no reason to do so as they are completely funded by their clients...