The FED loans a $ and it creates $5-$10 in credit in the banking system. Ok so the banks "owe" back the $1 at 2% interest or whatever the fed funds rate is today. What about the market rate interst on the $5-10? Do they owe all of that back to the Fed too? Oh I know, it is in demand deposits on which they have to pay interest, so they lend it at prime + (7-8%) and have to pay the depositor (1-1.5%). Such a hard life, and to get in you have to put all that capital at risk, expect that if you lose your capital, well the Federal Reserve just cooks up a bailout.
What part of this do you think we don't understand. All the blood sweat and tears that go into trying to make a profit off of someone else's money, worry that you might lose it! Hah!
I understand 70% of what you are saying. Do you know a short book that explains all this hocus pocus. You have to be a moron to own a bank and have it fail, the Fed is always ready to bail