The guaranteed FDIC bailout makes bankers less careful than they otherwise would be when lending money.

The S&Ls relaxed lending standards and lent generously to people who wanted to buy houses in the late 1980s housing boom. Buyers were afraid that they may be “priced out forever,” so they were willing to pay any price for a house and the S&Ls were happy to lend them money.

When subprime borrowers started to default en masse, S&Ls hiked the interest rates they pay on CDs, etc., in an effort to improve their liquidity. Savers, lulled by the (FDIC-like) NCUA guaranteed bailout, happily deposited their money. Eventually the party stopped, countless of S&Ls went belly up, and the taxpayer had to foot the bill for billions of dollars.