The banks owe money to many more people than they are able to repay simultaneously

It is a crime (for a bank or anyone) to spend money which it does not own. If Fractional-reserve banking (Frb) is illegal then the bank doesn't own customer deposits, they are owned by the customer, despite being in the care of the bank, for safekeeping. If Frb is legal (but not protected) then the bank can loan the deposit out and inflate customer deposits, without necessarily having the advantage of deposit insurance. It is a legal error to think that the bank is in ownership of warehouse deposits, and the bank has performed a crime in spending them. Most people making a deposit will only do so on the understanding that the assets will not be sold by the bank, otherwise it makes no sense to go to the effort of using the bank, even if they are compensated with a guarantee. Many people are not aware that to make a deposit (at a bank) is to exchange cash for bank credit, it is not a warehouse if it can sell the goods, the bank is not a guardian of the goods.

Without receiving deposits the bank will not be able to make new loans, because it will not have enough reserves to do so. The bank requires customer deposits for no other reason than to increase reserves. Many people are not aware that their money is not held on their behalf, it is (should be) no consolation to them that the money has 'only' been loaned, rather than spent, because it is worth nothing if it cannot be called in quickly. The money, once loaned, is deposited again in the bank and so now more than one person has a claim on the cash. It is not made clear to people that they do not have an exclusive claim on their deposits.