By guaranteeing all of the uninsured deposits in SVB, the FDIC ensured that most of those depositors no longer felt any need to withdraw their money.
As anyone who’s ever dealt with an insurance company knows: They like to minimize the amount they have to pay out in claims. The FDIC is no normal insurance company — but its actions last weekend are entirely consistent with a desire to save as much money as possible.
Roughly half of all bank deposits are uninsured, and of those uninsured deposits, only about $1.1 trillion is housed at the giant too-big-to-fail institutions known asThat leaves some $1.5 trillion of uninsured deposits across the country, most of which are earning an underwhelming rate of interest.and managed to wipe out the 16th-largest bank in the country within the space of 24 hours.
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