Where you go utterly utterly wrong, is here;
that banks pay for
Banks can't pay anything, they are not a person. Only people pay. The CEO of the bank will sign the check, but ultimately it has to come from;
- Employees (through their wages)
- Shareholders (price of stock, wether they are traded or not)
- Customers (cost of the product)
This is the basics of economics, the very start of it. Companies are fictitious, they are not entities you can touch, they exist only on paper. Therefore they cannot pay, only people can pay.
I've explained this in this thread over and over and over, but you really don't seem to learn anything from what I write.
So, when you say you propose an insurance scheme, you want to make us all pay for the failures of others. That's exactly the same as the system we have now, exactly.
If you take away the safety net, banks and their customers will finally start acting responsibly.