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I don't really understand why anyone would keep more than the FDIC insured amount in a bank.

Also, I'm constantly fascinated by how many smart people fundamentally don't understand the economics of banking and how these (often private) institutions create and destroy money.

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SVB has billions of dollars in client funds. Once you start having cash in the millions it isn’t practical to have all of it FDIC insured.

Maybe it's just because I haven't managed that kind of money on behalf of an organization, but it seems like you would get super paranoid about that aspect of things: spread your money between multiple banks, hold low risk assets with capital you don't immediately need, possibly even hold some in a straight up vault.

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