Must disagree with you here.
True, diversification is a good thing and makes banks stronger, more crash proof.
However, strengthening banks isn’t the only issue. Another issue is whether investors are bearing agreed upon risks and receiving commensurate returns.
When a bank is able to invest low interest savings in high risk instruments, and then also benifit from taxpayer funded insurance or bail outs in the event of a failure, the wrong investors are bearing the risks.
People who place their savings in very low return savings accounts or CDs, do so specifically to avoid risk. Let the investors earning high rates of interest take the risk.
Well, when you put your money in a bank, you want it to get the highest return possible, with as high a level of safety possible. Of course, the two work against each other.
But no, most investors would have no problem with their deposits going into funds any more than land, government bonds, or whatever. The main thing is that the bank in which those investments reside is SAFE and SECURE, and much more so without GS.