Critics of the current FDIC insurance programs often argue that only uninsured depositors have any incentive to discipline riskier banks.

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Critics of the current FDIC insurance programs argue that insured depositors also have incentives to discipline riskier banks. Insured depositors may choose to withdraw their funds or shift them to safer, better-managed banks if they perceive their bank as taking on too much risk. This can lead to a loss of deposits for the riskier bank, which can then face financial difficulties. Therefore, insured depositors also have incentives to encourage banks to manage risk appropriately, not just uninsured depositors.

Critics of the Current FDIC Insurance Programs Often Argue That