What you say is true, but the point remains that the limits imposed by the government only work if some depositors (large ones) bear some risk of losing their deposits. The limits may simply be moved up to $2 million or $5 million for certain kinds of banks, but the rules imposed by VCs and related investors require companies to concentrate all their business with one bank; this increases risk and needs to be outlawed (this kind of sweetheart deal is one of the reasons the bad managers at SVB piled up so many deposits). The VCs share a good deal of the blame here. There needs to be some incentive for multimillion dollar depositors to both evaluate risk and to be able to reduce it.