It's never the direct effects. It would likely cause people and companies with uninsured money in other banks to pull their funds out, quite possibly leading t

It's never the direct effects. It would likely cause people and companies with uninsured money in other banks to pull their funds out, quite possibly leading to cascading failures even for banks that are perfectly smart and healthy today. The simple fact is that no bank can survive a run. Not a single one. Because that's how the business works. IMO the best offramp from the systemic problem is to announce a schedule to phase out any protection for uninsured deposits. Say, 100% insurance for the next 6 months, declining by 1% per month after that, phased out completely in 8ish years. Slow enough to avoid panic and dramatic swings while allowing the industry to create new products and address the market need.