How was the FDIC bad?

In the case of protecting large depositors, their loss can result in negative repercussions in the local economy.

Explanation:

After the crash in the stock market in the year 1929, the bank failures were retained until 1930. Also, they continued for a few more years to get rid of the effects of the crash. The Federal Reserve had worked tirelessly to build back the country's economy.

In 1932, Franklin D Roosevelt elected as president and he implemented a new plan. It included a Banking Act that started a new agency called FDIC. This Federal Deposit Insurance Corporation is an organization that started to insure the banks and its depositors.

When a bank fails, the depositors can get covered for their losses. The major backside of this organization is that if the FDIC tries to save large depositors then it can reflect a negative consequence in the society.

Since it requires a huge amount of money will be needed to cover the failure of the large depositor. Also, the deposited fun by other local banks or deposited will be used to compensate for the loss of the large depositors.