Your post makes me want to call you a socialist fear-monger who never likes to let a good crisis go to waste.
But I won’t.
The banking system won’t collapse just like the world will not end if we go over the fiscal cliff. Just like we didn’t need TARP.
Name calling without an argument is not an argument, particularly when all you offer is a hand-wave "won't happen."
All banks are required to maintain reserves. Among the principal asset reserves is their loan portfolio. Eliminate the tax shelter of the mortgage interest deduction and the asset crashes in value. At that point the banks won't be able to loan because they must raise cash. They they won't be able to raise cash because people will be paying more taxes.
At that point, sonny boy, what you get is the crash you clearly want. Don't think it would happen? Remember 1992 when GHWB forced banks to raise reserve requirements? Remember those 13% construction loans? That was nothing compared to what you propose.
There. You see, it's not that hard. To make an argument one offers a rationale with examples. You can do that, can't you?
I doubt it.
Now in principle, I don't like the mortgage interest deduction either because it builds a society on debt. I just know better than to cut off a junkie on life support without some narcane on hand. You quite clearly do not.