Better to just ban such executives from the banking industry and set up better monitoring of banks to catch those that are trying to pull a SVB.
That would not be what I would argue for, but at 10% haircut for all depositors would create a nice incentive for reverse KYC.
* I don't really know if we should blame them for that. Who could have expected interest rates to rise so sharply, much less anticipate all the consequences from it doing so?
You invest $1.
Other people deposit $50.
You take $51 to a Las Vegas roulette table and bet it all on black.
50-50 chance there's $102 afterwards and shareholders and employees get to share most of the $51 gain; 50-50 chance there's $0.
Taking outsized risks with other peoples' money is a great gig for both stockholders and executives. We normally prohibit financial services firm from engaging in this kind of behavior, because the economic incentives favor outsized risk.
Even if depositors lose 5%. 5% that they shouldn't have earned because of the ultra high-risk position taken, maybe it's from them it should be taken...
If it fails, you can restart and recreate a bank, but you, your partners and your friends keep all the profit and privileges that you collected before the failure.
All that at the expenses of the government.
Your main task is to not fail too early, so you can recoup your initial investment (and if it can last forever if you are lucky / well-managing the risk, then better for you!)