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

Government bailout: money goes to the financial entity in question directly, to keep the financial entity alive, i.e. the bank does not go bankrupt but is saved by the government.

FDIC Insurance: The bank does go bankrupt. All the people who had money at that bank however do still get their money back, up to the insured limit of 250K, or even more if such a decision were taken.