No it isn't. In the history of the FDIC, no depositor has ever lost money, regardless of balance. The whole point of the FDIC is to avoid contagion, and they nipped this in the bud, again.
Moral hazard is if they made the investors whole. They did not. Depositors are not investors.
> In the history of the FDIC, no depositor has ever lost money, regardless of balance.
This is false. No depositor has ever lost insured money. Uninsured money has been lost.
E.g., Washington Federal Bank for Savings failure in 2018 [0] has resulted in dividend payments for uninsured balances covering only 41.66% [1], and that took nearly three years.
>The whole point of the FDIC is to avoid contagion, and they nipped this in the bud, again.
Maybe. Part of the problem here is related to Glass-Stegall. Depositors are essentially the ones backing the investors at a bank these days. So, they just shifted who's footing things here, from the depositors and investors at SIVB, to depositors and investors at other banks. This approach has essentially dispersed the risk into the broader economy. As so, don't be surprised if this ultimately exacerbates contagion in the end.
I’m inclined to believe that may not be entirely true [1]. It seems there is some evidence of depositor losses but they have been incredibly rare and insubstantial.
Moral hazard is if they made the investors whole. They did not. Depositors are not investors.