Just because they exceed the FDIC threshold (i.e. they're over 250K) doesn't mean there's a lot of risk - it just means there's more than zero risk and you have

Just because they exceed the FDIC threshold (i.e. they're over 250K) doesn't mean there's a lot of risk - it just means there's more than zero risk and you have to do some diligence. Those deposits are backed by the assets on the balance sheet at SVB. They went under because they ran out of liquidity, not because they're massively upside down or their assets are crap. Those assets are largely medium-duration treasuries (10Y IIRC). They will pay out face value as they mature (they are the definition of risk free), and the losses on their balance sheet being reported are marked to market. Assuming they have to sell them immediately - which they did have to in order to meet withdrawals. Now that the bank is in the FDICs hands, those medium-term treasuries need not be sold, and other liquidity options exist to make un-insured depositors mostly or entirely whole. One such option is just selling all accounts to a big guy like JPM, the way WaMu was handled in 2008. Or the FDIC can swap the treasuries for cash and since they have no time pressure, just wait until they mature.