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My understanding is they just wiped the slate clean. Returning the missing material was not required. But that's based on a radio report I don't remember well, so I could be wrong.

If you lose the book, you can replace it with another copy in good condition.

The policy used to be that you had to pay whatever the library paid for it, which could be quite a penny if they bought one of the library editions. Now a $7 trade paperback will do.

Your proposal seems reasonable and a fair way to prevent a few bad actor patrons from stealing the whole library and then claiming no repercussions.

I’m sure another way would be to start looking into accounts that repeatedly check out books and fail to return them.

I assume there is still a limit on the number of books you can have out. If you never bring one back you can't keep taking out more.