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My point wasn’t that the failed banks were megacorps, it’s that banking commissions just say “you’re insolvent”, then the FDIC steps in and sells to the highest

• bobthepanda 4y ago
  The acquiring institutions are also listed, which is what the commenter is saying; they're not really megacorps either. For a failure like WaMu, it was, but WaMu was the sixth biggest bank in the country, so really anyone acquiring its deposits would have to be in the top 5. --- the FDIC does two things; it makes sure that depositors are made whole, and it is supposed to stop bank runs from being contagious. Selling to another bank instead of taking it over makes both of those things much easier, because the FDIC does a good job of making sure the acquiring institution can actually handle it (unlike the EU counterparts, where sometimes the acquisition schemes ended up tanking the acquiring bank too); and because the acquiring bank exists and has money available, depositors have pretty much uninterrupted access to their deposits. (It's also not quite a sale, in that the FDIC voluntells the acquiring bank that they're about to take over a bank: https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-takeover https://www.npr.org/2009/03/26/102384657/anatomy-of-a-bank-t...) One thing to note is that while FDIC does insure deposits, it takes a while for them to get everything sorted, so you could be waiting weeks to get your deposits back. Given that a majority of households survey cannot handle a $400 surprise financial emergency, this outcome is still pretty bad for bank depositors.