It makes things marginally safer for you as a depositor because of how the FDIC insurance is structured. But it doesn't meaningfully reduce the FDIC's risk as t

It makes things marginally safer for you as a depositor because of how the FDIC insurance is structured. But it doesn't meaningfully reduce the FDIC's risk as the deposit insurer: 1000 businesses, 10 (same size) banks Scenario A: each bank has 100 depositors, each storing 100% of their deposit with the bank Scenario B: each bank has 1000 depositors, each storing 10% of their deposit with the bank In both scenarios the total amount deposited at each bank is the same. The risk to FDIC if an individual bank fails is actually higher in scenario B. But the deposit insurance limit rules push us towards scenario B.