> have enough to cover maybe 1-2% of all deposits? When the real stuff hits the fan and the buck breaks, there won't be any FDIC to protect any investment
The FDIC "is backed by the full faith and credit of the United States government" [1].
Its reserves (a) provide quick cash in case of limited problems, (b) insulate the Treasury and Congress and (c) hold the FDIC leadership accountable. On account of (c), the FDIC oversees its insurees, including by implementing reserve requirements [2].
> As required by the Federal Deposit Insurance Act, the FDIC Board adopted a Restoration Plan on September 15, 2020, to restore the DIF to at least 1.35 percent by September 30, 2028. The Plan requires the FDIC to update its analysis and projections for the DIF balance and reserve ratio at least semiannually.
The FDIC "is backed by the full faith and credit of the United States government" [1].
Its reserves (a) provide quick cash in case of limited problems, (b) insulate the Treasury and Congress and (c) hold the FDIC leadership accountable. On account of (c), the FDIC oversees its insurees, including by implementing reserve requirements [2].
[1] https://www.fdic.gov/resources/deposit-insurance/faq/
[2] https://www.fdic.gov/regulations/laws/rules/7500-500.html#fd...