> > If depositors are confident that the government has their back, there's no reason to pull money out. There is also no reason to put the money in. You go t

> > If depositors are confident that the government has their back, there's no reason to pull money out. There is also no reason to put the money in. You go through the trouble of protecting your money because you deem them scarce and irreplaceable. If tomorrow a commercial bank insured with the FDIC starts offering a product promising 20% interest, then by all means people should get together and apply in mass, get a couple of big political donors on board and all of a sudden there is no downside. If the wacky bank keeps its promise then it's a 20% gain, if not then the FDIC will have depositors backs anyway to the full amount