I believe that if actually bank were left to run unchecked, specially having no help from government, more of them would fail... Yes, it would be quite painful in short term, but long term that sort of crap would stop.
The regulation that exist right now, and that people keep trying to expand, has the end result that ties the government too tighly with banks, and bailouts and other help from government become a necessity.
Removing FDIC and letting banks fail would mean that individuals would only deposit money when banks had high equity %. i.e. the bank owners/shareholders invest 30 cents of their own money for every 70 cents of the customers that is loaned out. That way if loans start to fail the customer is protected by the owners share.
well governments de facto need the banks to lend them money, which is used to finance their welfare policies (and their wars), which in turn gets them elected. So politicians make it easy on the bank and ask everyone to pay up. I am making things sound simple on purpose, but it's not too far from the reality.
It sounds like you're talking about eliminating things like the FDIC, which is crazy. People (and banks) suffered tremendously before bank regulation evened out the business cycle. Then they decided to ease things up and let banks play around with depositors' funds, and within a decade we had the financial crisis.
Banks ran wild with unregulated markets that ended up being a huge percentage of the economy. That's what got us into trouble.
Banks and the financial sector were always heavily regulated, even during the years before the crisis.
The whole securitization of debt and cutting it up into tranches only get fuelled up to such an extent, because there were customers hungry for yield but barred from buying anything that didn't have some official (even useless) triple-AAA stamp on it.
The regulation that exist right now, and that people keep trying to expand, has the end result that ties the government too tighly with banks, and bailouts and other help from government become a necessity.