I know where you are coming from and agree that govt. should not perhaps be involved.
As for calling it fraudulent, I think its silly. Banks should be allowed to leverage their savings a thousand fold if they want and if people trust them. It will still not make it fraudulent as long as they are not deceiving the public.
Fractional reserve banking will not go away unless it is outlawed by GOVT. It is an emergent property of any free market banking system.