It's not great, but I don't see who else is supposed to cover this. The depositors? Not only does that seem unfair, that would destroy faith in banks -- and the

It's not great, but I don't see who else is supposed to cover this. The depositors? Not only does that seem unfair, that would destroy faith in banks -- and then where would banks be? Even worse off than paying an assessment. Simply having the privilege to participate legally in the fractional-reserve system seems plenty profitable for them, and I think they'll grumble and pay rather than be left out of the game. The only alternative would be if bank shares could go negative, i.e., if bank shareholders could become liable. Maybe Switzerland did/does work like this? Then you might not want to hold those shares without also buying a cheap $0-strike PUT from an insurer. But arguably that's what's happening here in the end anyway, just with the FDIC in that insurer role. I think the government did the right thing here.