No, I don’t think it would work.
The idea of the system is to prevent any loss on the part of the banks. The system shifts the ultimate burden to the taxpayer through the hidden tax called inflation.
In your scenario, to prevent too many banks failing, the Fed Reserve would print enough new money to bail out the failed banks. The influx of newly printed money would drive up prices (inflation) and devalue whatever money people had.
This, in turn, would increase the percentage of the GDP our national debt represents, which further harms our economy as it makes the US look like a bad investment from internal and external investors.
The best way to solve this situation is for the gov to get out of the way and let the markets work. That means letting businesses and banks fail. It would be a shot on the chin for a lot of people, but when we regroup, we would be much better off for it. As it is, we may never be able to regroup because the free market and the risk of bad decisions is constantly removed by the government bailing out failures.
Well stated AND...GREAT TAGLINE BUMP!