What is the practical difference between a government bailout vs. the FDIC being made to keep all depositors whole, even over the normal insured $250k limit?

Question

What is the practical difference between a government bailout vs. the FDIC being made to keep all depositors whole, even over the normal insured $250k limit?

In: 21

Answer 1

Bailout – government provides funds to keep the bank afloat because it doesn’t have enough assets to cover it’s deposits

The two the FDIC are currently covering actually have enough assets to cover their liabilities, they just don’t have enough *liquid* assets to cover an immediate bank run. Government is just providing access to cash while the longer term bonds mature, but in the end the government doesn’t spend any real money, it just trades cash reserves for assets