Well and it's not just that they had money over the insured amount in a bank. It's that they had ALL of their money in ONE bank. If they had $500K in three diff

Well and it's not just that they had money over the insured amount in a bank. It's that they had ALL of their money in ONE bank. If they had $500K in three different banks instead of $1.5M in one bank, there would still be a risk, but it would be that they'd lose $250K if any of those three banks failed, not that they'd lose $1.25M if one particular bank failed. (And obviously actual losses are gonna be like 20% here, not 100%, but you get the picture).