The idea is fractional reserve banking is that the loans are at least good enough in aggregate in normal course to cover its liabilities. Of course there are b

The idea is fractional reserve banking is that the loans are at least good enough in aggregate in normal course to cover its liabilities. Of course there are black swan events (https://www.investopedia.com/terms/b/blackswan.asp https://www.investopedia.com/terms/b/blackswan.asp) that are so far out of expected that banks fail anyways, or the banks are incompetent and make things like sub-prime mortgages (https://en.wikipedia.org/wiki/Subprime_mortgage_crisis https://en.wikipedia.org/wiki/Subprime_mortgage_crisis) that tend to fail all at a once.