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“The banks should be liquidated and creditors payed off”
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That’s just it if a systemically important bank is liquidated few if any creditors will be paid off and and the collapse of a systemically important bank would collapse the whole house of cards (the entire financial system implodes) just look at the quadrillions in derivatives they hold on their books.

This is the sort f thing I’m referring to. And remember this is just one bank.

Credit Suisse’s $39 Trillion Derivative Debt Poses Significant Threat to US Financial System.

According to a report by the Bank for International Settlement, this unreported exposure is 10 times greater than their capital, with an estimated $39 trillion of dollar debt held off balance sheets.

The quarterly derivatives report from the Office of the Comptroller of the Currency found that four US mega banks held 88.6% of all notional amounts of derivatives in the US banking system, with a total notional amount of $195 trillion.
https://www.themacrolist.com/p/credit-suisses-39-trillion-derivative

These systemically important banks all have exposure to each other and when one goes down chances are they all do.

Bull chit. Banks are not supposed to hold derivatives to back their depositors. The asset classes are very limited by law. The investment/broker side of the business have different regulations. SVB and Signature were not brokerage houses. They held US treasuries and other bonds as Assets for Sale (AFS). When the Fed increased interest rates, the value of their AFS fell. That’s how the bond market has always worked. These eff’n neophytes did not properly manage their assets. These eff’n morons didn’t see the writing on the wall that when inflation took off that the Fed would raise interest rates and the bond market would crater. They could have easily converted the AFS assets into cash early on and avoided this mess. They would have foregone a minor bit of interest the bonds paid when inflation was stripping all that value away anyway.

Things were so mismanaged at SVB, that AFS assets lost up to 60% of their value. They had to sell Held To Trade (HTT) and Held to Maturity (HTM) assets to keep the lights on because those securities were lesser loses compared to AFS assets. That didn’t happen overnight. SVB was technically insolvent back in September, but lazy ass regulators did nothing. KPMG literally gave SVB a clean bill of health just weeks before collapse. How did that happen and who got paid to write that report? Two weeks prior to total collapse SVB executives illegally sold millions in SVB stock - insider trading. Do you think they didn’t know what was going to happen?

Upon reflection, institutional and individual consequences need to be extended to regulators and KPMG.

As for the entire financial system imploding, there really is no risk of that. There are approximately 180 banks out of thousands at risk.

Quite literally, the vast majority of banks have been managing their assets and risks.

The impact of the 180 banks, if they fail, is only felt by hardworking Americans when those banks are bailed out. By the way, it’s hideous to think actions by Yellen and Powell are going to stop all of these at-risk banks from failing.

It’s very realistic to think that by the Fed opening it’s window that hundreds of billions of newly printed money is being pumped into the economy and sparking higher inflation. That will hurt you and me, and the same cast of incompetents will be made filthy rich without risk. Inflation doesn’t matter to them.

Here’s one more thing to think about: from 1980 to 1993 America had some 1,600 bank failures. Did you notice? Did it affect you? At that time no bank was considered too big to fail.