It’s not FUD. If the government sends the message that depositors will go down with the ship every bank that isn’t considered too big to fail will see all their

It’s not FUD. If the government sends the message that depositors will go down with the ship every bank that isn’t considered too big to fail will see all their uninsured deposits start moving out. Many of them won’t be able to meet their liquidity needs as a result and go into receivership. With every bank that goes into receivership the outflows will only accelerate. People will start to get worried about insured deposits as we hit the limits of what FDIC can cover and insured deposits will start to flow out and into systemically important banks as well, further accelerating the death spiral of all but the biggest banks. This isn’t some made up scenario, start asking people that have underinsured depositors about their money movement plans.