In cases such as this one it strikes me as really odd: I would say that as citizens you have much more leverage over the government's actions than over whatever bank does (including handing over your data to the government). Thus, how is it better to have an account in some random bank than in the federal reserve (or whatever)?
With Snowden's revelations of things we mostly already knew, we can see that we don't really have much leverage over government abuse of power to collect and misuse data. The government is already doing broad data collections from private companies using secret courts... it would be a whole lot worse if the government already possessed the data.
With private banks, I can choose which one I use. There is at least some motivation for that bank to be on my side, and I don't have to wait for an election cycle and hope that my issue fits in with my side on other issues and that side gets >50% after 2 or 4 years ... my bank does something I don't like and I can switch today.
I don't trust my government to do a good job doing anything, or for anything my government does to not be vulnerable to political destruction (just look at the post office).
Banks are required to report transactions above $10k, my bank knows when I go out to buy too many gas station snacks at 2am, my government does not.
The problem is the account. I do not want an account in the federal reserve or anywhere so closely coupled with the government. Nor do I want an account with a public ledger or any way distributed which doesn’t allow for transaction reversals (theft) which rules out blockchain.
Actual banks are necessary.