> The shareholder both get to keep the winnings and can get wiped out. So they are the ones who set the bank policy.
But it's the depositors' money they're gambling with.
Suppose you can put a million dollars of your money in something that has a 10% chance of netting you 20 million dollars and a 90% chance of losing your million dollars plus 20 million dollars of the depositors' money. That now has a positive expected value for you even though it has a negative expected value overall and results in a 90% chance of triggering a 20 million dollar claim against the FDIC.
Meanwhile your counterparty is quite happy because you gave them 21 million dollars in exchange for a 10% chance to less than double "your" money.
But it's the depositors' money they're gambling with.
Suppose you can put a million dollars of your money in something that has a 10% chance of netting you 20 million dollars and a 90% chance of losing your million dollars plus 20 million dollars of the depositors' money. That now has a positive expected value for you even though it has a negative expected value overall and results in a 90% chance of triggering a 20 million dollar claim against the FDIC.
Meanwhile your counterparty is quite happy because you gave them 21 million dollars in exchange for a 10% chance to less than double "your" money.