Banks are rich because they can print money

Fractional reserve banking means that there is a difference between narrow money and broad money. Unless this situation persists (which we will come back to) then that leaves one of two options available: we can either i) Monetise all the credit leading to an inflation of narrow money so that existing broad money becomes narrow money... or ii) Let the banks fail and experience a financial crash. Since neither of these is palatable we tend to go on in a neutral position with both narrow and broad money (and fractional reserve banking) existing.

Fractional reserve banking exists if there is a difference between narrow and broad money... if such a thing as broad money exists.

Since fractional reserve banking (frb) persists and broad money exists then banks are able to issue something of value which normal companies are not able to do. This situation is equivalent to banks being able to print government narrow money unless a crash is possible. If a crash is not possible then banks effectively print money. Even if a banking crash is possible being able to print broad money in the short term is very similar to being able to print cash... even if eventually there will be a crash. It's not very much preferable to the rest of us for banks to only be able to print broad money (and not cash) than for them to be able to print cash. If banks could print cash it would not be much worse.

Fractional reserve banking would only be different from outright counterfeiting if we can expect there to be a banking crash... otherwise it is equivalent. Frb is counterfeiting unless there will be a bank run and a crash of the financial system. If there is not a crash it is counterfeiting.

This means that due to their privileged legal status banks (together with their customers) are able to accrue wealth merely by increasing the money supply... rather than by conventional free-market means. If a fiat currency is imposed on the population then anyone who can print that currency will find it easy to acquire wealth. Banks are not poor because they can print money. Banks are rich because of deposit insurance.

Wealth is finite on a finite planet so it is a problem if banks can print their own money because they will be able to control an excess of the scarce resources. It is a problem if agents within the economy can print money... counterfeiting is a problem because it is not fair on the rest of the population. Counterfeiting is unfair.