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There was an Ezra Kleine on this off the back of the SVB collapse.
The basic premise was that the Fed should insure all depositors. As it was broken down it seemed to make sense. If you know that your deposit is underwritten then there is no reason for a run, and the bank has a better chance of staying solvent. As it's the depositors who are protected you still let market hands fist shareholders if required.
hugo7
Leshaches
Societies/govts would need to come up with a better way of shuttering banks than currently exists. Right now simply letting a bank crash and burn is a good way to cause runs on other banks, panic investors and motivate mass capital flight, risk national credit score and currency devaluation, loss of faith in govt, and lots of others spiralling consequences.
2008 taught bankers that they’re fucked if they fail, unless they fail so hard it threatens to bring the whole system down with it, in which case they’ll get a bailout that ensures their own ridiculous bonuses still get paid.