I think that's quite an odd way of looking at it. Anti-fractional reserve theorists appear to believe that banks never lose any money in bankruptcies.
Annoying, isn't it? At the root of the problem is an erroneous view of how fractional reserve banking creates money.
If a bank takes $100 in deposits and has a 10% reserve requirement, it may choose to lend up to $90. It looks like this:
Assets: $10 reserves, $90 loans. Liabilities: $100 deposits.
Those $90 it lent out gets spent and whomever recieves them may put them back into the bank, and the bank may again lend out 90% of that. If repeated to the full extent possible you get:
Assets: $100 reserves, $900 loans. Liabilities: $1000 deposits.
Fractional reserve conspiracy kooks have a tendency to say that the bank has now created $900, since they still have the original $100 and $900 in loans, they just willed it into existance somehow and if they lose that money, well it's no skin off their backs.
Back in reality however, no new money has come into existance, just a bunch of debt(the bank owes $1000 to depositors and is owed $900 by lenders, this was accomplished by passing the same $100 back and forth).
The money creation comes when depositors treat the bank debt as if it were money; they pay with a credit card or check or something of that nature. What happens then is that the bank transfers the debt they owe to a depositor from one bank account to another bank account. The recipient of the check or credit card has just accepted debt owed by a bank in lieu of money and they've done so voluntarily. The bank doesn't monetize its debt, its depositors do.
In reality, a fractional reserve bank is quite highly leveraged and taking even a small loss on outstanding loans can quickly bankrupt them.
Nor is there anything fraudulent about fractional reserve banking if proper standards are followed. If someone wants a mortgage for instance, a responsible bank will demand a sufficient down-payment so that even if the house depreciates rapidly and the mortgage defaults the bank can still recoup their investment; a responsible bank will generate a detailed credit risk assesment for each person based on income, existing debt service, how many houses are in default in the target area, credit history etc. Unsecured loans(e.g. credit cards) should never exceed their excess capital and interest rates should be set accordingly.
With properly secured loans the bank does not make the full profit desired if a loan defaults, but it won't kill the bank even if every secured loan fails. With unsecured loans being met with excess capital the bank can eat the defaults from 100% of it's unsecured debt without needing a visit from the nice men and women working for the FDIC. Neither of these will make the share-holders happy since they will not realise the full profit or will take a beating, but the bank will stay solvent which means that should it choose to, the bank can sell all those loans and other assets, repay all its depositors in full, have some money left over to be divided among its share holders and close its doors. As soon as the institution is known to be insolvent it must be taken into recievership to minimize loses to its depositors and the FDIC or it might go further into insolvency.
