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Hmm I think having a limit probably does make things marginally safer. If you can have $250k in 4 bank accounts or $1MM in 1 bank, it's far less likely that all 4 of those banks would go out of business at the same time vs 1 bank. This decreases the likelihood that the FDIC would have to payout. Also having a limit in theory should force depositors to consider the safety of who they're banking with.

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It makes things marginally safer for you as a depositor because of how the FDIC insurance is structured. But it doesn't meaningfully reduce the FDIC's risk as the deposit insurer:

1000 businesses, 10 (same size) banks Scenario A: each bank has 100 depositors, each storing 100% of their deposit with the bank Scenario B: each bank has 1000 depositors, each storing 10% of their deposit with the bank

In both scenarios the total amount deposited at each bank is the same. The risk to FDIC if an individual bank fails is actually higher in scenario B. But the deposit insurance limit rules push us towards scenario B.

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