Because many of the derivatives were made under international financial contractual obligations which do not recognize FDIC. The creditors will take it first and ask questions later. MF Global customers were under CMFTC regs and the creditors operated under international regs. Problem is after your account is frozen you have to wait for some bankruptcy judge sort it all out. In the old days a bank that went bankrupt, it was close down by the FDIC, but days before the auditors froze all the accounts before they closed the banks. Today a bank can unilaterally declare bankruptcy and in the instant of a computer keyboard accounts empties to pay off creditors per international obligations, and customers must use US regulations to sue and get their money back. That is the main story about the MF Global Customer Account robbery that the MSM missed. These accounts were protected by US regs but MF Global used international obligations to dip into them, then declare bankruptcy before Fed Reg can move in, and the international bankers got the money and refuse to give it back unless someone goes to court and contests their actions. Isn’t globalism and international banking wonderful?
Technically, FDIC insurance is not sovereign debt like a T-bond, but it might as well be. If the FDIC defaults on its 250K promise, then the mother of all bank runs would follow.