But regulators argue that they had to make an exception this time because there were signs that panic was spreading, and this was the only way to keep the financial system stable. REZVANI: So the government wants customers to scrutinize their banking institutions and not get too comfortable with the idea that the government is simply going to intervene every time things go sideways. For wealthier people or companies, large organizations, that will have bigger deposits, you want them to look at the bank carefully, kick the tires, make sure it's a safe place. SHEILA BAIR: It's a question of moral hazard. I talked to Sheila Bair, who ran the FDIC during the 2008 recession. REZVANI: Well, these limits were designed to keep people from thinking they would always be saved. PFEIFFER: And what is the point of the FDIC saying that there are limits to what it will insure when, as we're seeing in this case, it's actually willing to go beyond that? The FDIC tapped into that fund - that insurance fund - to pay the customers of the two collapsed banks back in full, which basically means that those previously uninsured portions suddenly became guaranteed. Now, there was an exception made over the weekend to go well beyond that limit. Banks pay fees that go toward an insurance fund, and that's what's used to pay people back should a bank go belly up - again, up to $250,000. Anything under that has long been fully protected by the government's FDIC. REZVANI: So for years, $250,000 has been the limit. PFEIFFER: So tell us how FDIC insurance would normally work. PFEIFFER: Here to walk us through that is NPR's Arezou Rezvani. Was this a bad precedent or necessary to keep the financial system stable? When two banks - Silicon Valley Bank and Signature Bank - failed, the federal government jumped in to guarantee deposits greater than $250,000 - amounts that aren't normally insured. Two hundred and fifty thousand dollars - that number has become the subject of a heated debate.
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