> Also, this was paid out of bank-funded insurance, not any direct taxpayer funds.
It was paid out of unrelated bank-funded insurance. If I insure my cat, and I get a payout when my dog dies, it's not from "bank-funded insurance." Not only was my dog never insured, so I never funded its insurance, but the cat insurance also wasn't somehow transformed by proximity or similarity into dog insurance, although they both lived in the same house and are both pets.
The reason this is clearly true is because if hypothetically a week from now a few banks failed that held enough accounts under the federal insurance limit to deplete the remainder of the insurance fund, the failure of the insurance would no doubt also be backstopped. It's like stealing from the cancer fund to pay for plastic surgery, because you know that if the cancer fund runs out, people are going to be willing to shore it up.
> It was paid out of unrelated bank-funded insurance.
Every insurance system on the planet works like that, or is intended to, and FDIC insurance is no exception. Insurable risks covered by a large customer base. Institutions that present a higher risk pay higher rates.
The FDIC cannot actually go bankrupt under any conceivable conditions because by law FDIC member banks are required to cover the costs, even extraordinary costs as might be presented by a major financial crisis. And fortunately the sector as a whole has ample resources to do so even under conditions as severe as the Great Depression. The $128 billion that the FDIC has on hand is nothing compared to the ~$7 trillion in bank assets in excess of liabilities that are backing it up.
It was paid out of unrelated bank-funded insurance. If I insure my cat, and I get a payout when my dog dies, it's not from "bank-funded insurance." Not only was my dog never insured, so I never funded its insurance, but the cat insurance also wasn't somehow transformed by proximity or similarity into dog insurance, although they both lived in the same house and are both pets.
The reason this is clearly true is because if hypothetically a week from now a few banks failed that held enough accounts under the federal insurance limit to deplete the remainder of the insurance fund, the failure of the insurance would no doubt also be backstopped. It's like stealing from the cancer fund to pay for plastic surgery, because you know that if the cancer fund runs out, people are going to be willing to shore it up.