crazy_dave: I don't think the fallibility or lack thereof of the banning process matters one whit. Even for someone who has been legitimately banned from multiplayer servers for cheating or committed fraud on any purchase should not ever lose access to games they legitimately purchased.
That should be obvious and incontrovertible. This former practice should not be in any way shape or form be defended by the argument: "but they deserved the ban".
VAC bans only got you banned from serves using VAC, not your library. Sucks for MP heavy games but otherwise it's normal.
And a downright "loose all access to games ban" is very, very rare and most often affects "fake accounts" (those who only have a couple of games in it). The rest get's restrictions or their game removed. Whenever Steam get's notice of fraudulent CC activity they
have to act. The "how" is debatable, but they have to at least restrict purchases from this account.
Many of the risk you face on Steam are the same you face in real life. If I go around the corner and buy a bicycle, I can also get this legally taken away from me it if it was stolen (even if it all looked perfectly legal). I can go to the guy who sold it to me, but that is mostly a lost endevour as they usually aren't the kind you can expect money from. Same goes with Steam trading. Every trade is a risk, that's why I don't do it.
And they
can take away all your games, because you sign a SSA with each purchase. To totally cancel the SSA however (at least in germany) it must be a very serious contract violation and they must refund you the legitimate games (full price or not is another debate).