It's the same risk profile to the FDIC (risk as in the the risk that they have to pay out on the insurance). Unless you change the overall weighting of deposits

It's the same risk profile to the FDIC (risk as in the the risk that they have to pay out on the insurance). Unless you change the overall weighting of deposits between banks the total covered deposits at risk per bank is the same in both cases. If every single depositor split their accounts up to always stay under the 250k limit at each bank, FDIC has to insure 100% of deposits at each bank. If there was no limit, and customers didn't split accounts, FDIC has to insure 100% of deposits at each bank. For any individual bank failure the amount paid out by the FDIC will be the same under 100% deposit insurance vs 250k split deposits. The total deposits insured per bank is the same The behavior change (businesses less likely to panic in a run) is the same. So it seems to me there isn't a meaningful risk difference to FDIC between this theoretical 250k split deposits world and a 100% deposit insurance world.