Most people treat bank deposits as bailment. Why is this the case? Is this a problem?

Question

Explanation:

99.999% of people treat bank deposits as bailment.

But under FDIC rules, only the first 0.25 million is bailment. Amounts above that are loans to the bank. If the bank goes bankrupt, that amount is subject to loss.

But the problem is, 99.999% of people do not operate that way. This includes multi-millionaire tech founders who deposited large sums with Silicon Valley Bank.

An analogy:

Imagine if 99.999% of people thought that they could petition their grievances to the government. But when they actually try to do so, government agents arrest them by the thousands and throw the book at them. This scenario is absolutely 100% hypothetical.

Questions:

(1) So what is the reason for the massive discrepancy between expectations and reality, regarding the nature of bank deposits?

(2) Is this discrepancy a problem? From what I see, it results in continuous bail-outs of failed banks, because people deposit critical funds and life savings in loan instruments that they perceived to be bailments.

(3) Are banks guilty of not properly informing customers about the non-bailment nature of deposits above 0.25 million?

(4) What can be done from a legal point of view to reduce this discrepancy between expectations and reality?

Answer 1

99.999% of people treat bank deposits as bailment.

This is not borne out by the evidence. The evidence is that most people do not conceptualize their daily interactions and relationships in legal categories like "contract," "bailment," etc. Most people do not turn their minds to the web of risks and rights that they operate in day to day.

But under FDIC rules, only the first 0.25 million is bailment.

This is also not true. No monetary deposit is a bailment. The concept of bailment is limited to tangible property (e.g. the contents of a safe-deposit box). This is well-established common-law principle, but see generally Dickerson, "Bailor Beware" (1988).

The remainder of your question asks for multiple opinions, each of which appears off-topic here, so I have tried to correct misunderstandings in your premise.