Reply #7: No, that's not true

[Yo_Mama]

What happens is a cascade. The retraction of money involved in busting bad banks rolls rapidly over to companies in the Main Street economy, and they all have to curtail spending. This sets up a declining dynamic, with more people and companies losing jobs and being unable to pay their loans back. That rapidly shifts the disaster into your local CU or community bank.

It's the scale that's important. Keeping financial swings small enough so that we can let the bad financial companies fail should be the primary goal, but the US abandoned that policy and went European in the 1990s by repealing Glass-Steagall, and now we are primed for a European-type implosion.