It doesn't have to cover all of deposits, it has to cover failures. The chances of every bank in the country simultaneously collapsing is slim (and you've got bigger problems at that point than your balance). No one's lost a penny worth of FDIC-insured funds since 1933.
Samll banks, on the other hand, fail every week and the FDIC cleans them up so fast no one even notices.
Congress already did this. The FDIC reserve fund is mostly an accounting and accountability thing. The act creating the FDIC gives it the explicit backing of the United States’ “full faith and credit.”
Sounds like the system worked extremely well.
They're not going to do that for Coinbase.
https://www.thebalance.com/savings-and-loans-crisis-causes-c...
Leaving aside the question of whether it's advisable to have the government in this business in the first place, I'd say we should at least agree that, if it's going to happen, financial institutions that benefit from these programs should be required to be absolutely allergic to risk. Letting firms make questionable loans and pocket the profits while passing the risk on to taxpayers has, as far as I'm aware, never worked out well in practice.
The S&L crisis involved S&Ls [1]. Not banks [2]. That was the problem. People making up non-bank “banks” and then blowing them up in the exact way the banking regulations they were looking to escape were written to avoid. Sound familiar?
S&Ls were covered by FSLIC. It differs from the FDIC in an important way: it was not backed by the “full faith and credit” of the U.S. That makes it more like Sallie Mae than the FDIC. (Indeed, it comes out of
[1] https://en.m.wikipedia.org/wiki/Savings_and_loan_association
[2] Banks also failed. But they were resolved in an orderly way by the FDIC. Nothing there threatened to go systemic. https://www.fdic.gov/bank/historical/history/3_85.pdf