Had the banks been allowed to fail during the onset of the global financial crisis, payrolls wouldn't have been met due to a lack of credit liquidity. If payrolls weren't met, employers including some segments of the government might have had to file for bankruptcy. These employers rely on client income. No credit, many corporate clients would have had difficulty paying their bills, which includes payroll. Banks fail, employers fail, everyone fails.
Also, with the market losses, the wealthy lost the most at least in unrealised terms unless they panicked and liquidated, hence crystallising their losses. Seniors who relied on the market for their retirement nest egg and funds, would have been in dire straits had the banks been allowed to fail since the losses we saw in the market, weren't even close to might have happened. Also consider the baby boomers of which most haven't retired yet, who invested their retirement funds into the market. They too would have lost everything. Pension funds, 401Ks, all of it was invested in the market.
If you consider these two largest segments of the population relying on social security to live, social security that wouldn't have been available, who then would have had to support them during their retirement years, especially during a major depression?
Unimaginable pandamonium would have struck. The depression would have put the Great Depression to shame.
I had a discussion with a couple of young guys during this time about it. They were both software developers working for the same company. As far as they were concerned, if the banks were allowed to fail, it was no skin off their back since their company was doing so great and had nothing to do with the financial industry. So I asked them how their company invoiced clients and how payroll, accounts payable, receivable and treasury were handled within their firm. They had no idea and didn't care to know. So I asked them if their company drove up to their clients and made them pay cash for their development services and they laughed and said "No way". Then I asked them if their company sent invoices to their clients and they said "yes". Then I asked them how many days their clients had to pay these invoices and the guarantee that the money would come in, in time to meet payroll. They were deathly silent. Duh!