The main remaining moral hazard would be that customers would be incentivized to choose banks that offered higher rates as a result of taking on unsustainable risk. But this moral hazard is checked by investors who are directly incentivized to remain solvent and liquid, because otherwise they will lose everything.
This leaves me with two questions:
1. Did investors of the bank literally lose everything? Or did they get bought out by the government at pennies on the dollar? If indeed this was a liquidity crisis, rather than a solvency crisis, it seems like the shares would still be worth something. Did the shareholders have to agree to give up their ownership, and were they compensated for that?
2. Why didn't the 2008 bailouts follow this model? The way this bank failure was handled makes much more sense to me than the 2008 model. It seems right to me that shareholders should lose everything if the institution fails. Why did shareholders get to keep their companies in 2008?