Earlier quoted context omitted.
https://en.wikipedia.org/wiki/Promontory_Interfinancial_Netw... On any given night your dollars are spread out at banks all over the country. Likely at tiny little community banks that you've never even heard of. It's pretty impressive how banks manage to maximize FDIC insurance.
Maybe it's because I don't understand how deposit insurance works. Maybe it's because I live in a country where there are relatively few banks. But is this insurance actually meaningful? For example, if RBC "failed" in Canada, woulnd't the payout largely come from the Bank of Canada printing more money and all this could essentially happen without CIDC existing? You might get your money back, but now a loaf of bread…
Like any other form of government spending, that is not directly covered by "printing money"; that can't be done by the federal government. Instead, the money would come from a mixture of spending cuts, additional taxes, and additional borrowing. (Given current US politics, most of the money would probably come from borrowing.)
Now as part of an independent process, the central bank conducts open market operations where it sells and purchases US debt to try and keep inflation and interest rates within targets. When it purchases debt, money is effectively created, and if the US was forced to borrow a large amount of money to cover an FDIC shortfall some of that debt would no doubt end up purchased at least temporarily by the central bank, so:
> woulnd't the payout largely come from the Bank of Canada printing more money [...] You might get your money back, but now a loaf of bread costs $1000.
In the US, some portion of the funds would indirectly come from the central bank printing more money, but only to the extent that it would not cause that sort of spike in inflation.
(Also note that even when a pretty big bank goes under, they still have a lot of assets, and the actual cost to the insurance program once everything has been liquidated is generally very small if not zero. Even if extreme cases such as Iceland when Landsbanki went under, the desposit insurance guarantees were eventually covered by assets recovered in liquidation.)
So basically: 1) Deposit insurance is very important to prevent bank runs (ie, people panicing and causing bank failures even when the bank is actually solvent and 2) It's not that expensive, and doesn't represent the sort of risk or potential costs you can imagine. There aren't a lot of policies which are basically all upside, but deposit insurance comes close.