Why the fdic is following a too-big-to-fail policy, International Economics

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Q. Explain why the FDIC is following a "too-big-to-fail" policy of fully protecting all depositors at the largest banks.

Answer: It is a tricky question the FDIC does that even though officially it still applies only to the $100,000 limit. Almost certainly the idea is that the cost to one depositor is unbearable relative to the small cost we all need to pay as a collective. As well there are the issues of political pressure and avoiding blaming the government for mismanaging the safeguards.

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