People don't care about the safety of their bank because of the FDIC, but they do care about interest rates. Rival banks will be able to offer higher returns be

People don't care about the safety of their bank because of the FDIC, but they do care about interest rates. Rival banks will be able to offer higher returns because they will be earning higher, riskier investment returns. Moreover, with a lower return on equity modeled in than every other bank in the industry, nobody is going to give you money to start with. Lastly, there are severe limits to how innovative you can be with a bank, again because of the FDIC. The only way I see this gaining any traction is as a niche bank for people with deposits over the FDIC insured limit who might want a little more safety. However, there are two problems with this. 1) He proposes to turn away deposits of this size at first and 2) people with that much money usually have better options.