And what unintended consequences would that have?

Maybe a better idea is for those who actually need to be risk-averse to carefully consider the full chain of risks associated with their investments, and not merely put their full faith in abstract systems - especially regulatory systems, which fail quite often.

The financial crisis wasn't the result of banks conning the public; it was the result of essentially everyone at every level buying into too-good-to-be-true presumptions about the real estate market.

Noone considers full chain of risks. Most people feel they are immortal, feel that they are forever winners as soon as they won 3 times in a row. Besides there really no risk taken by decission makers. They often don't even loose their jobs.

The only thing we can do is set up barriers to curb the risky behavior. Some risks are worth to be taken but by hedgefund not a bank.

As for the financial crisis no catastrophy can be traced to a single cause but it often turns out that not failing at single point could have averted the catastrophy.

And are the limits of "how much gambling" the bank can do with the money defined by some universal prescription or by the particular understanding established by the bank and the depositor in each case?

If the former, then we're back to universal usurpation of everyone else's risk judgments by... whom, exactly? Yet more human beings, subject to the same failures of judgment as the people who you claim are incapable of effectively assessing risk?

If the latter, where's the evidence that there ever was a breach of that understanding? Reward is proportional to risk, and those seeking high-interest investment opportunities implicitly acknowledge that with higher return comes higher risk.

> Noone considers full chain of risks.

Plenty of people do, and where sufficient information to make a confident risk judgement is unavailable, plenty of people take that into account and plan accordingly.

"Most people" do not feel they are immortal or perpetual winners; indeed, although the systemic effects of the financial crisis have impacted us all, the number of people who did not engage in irrational real-estate speculation far exceeds those who did. (The "everyone" I mentioned above refers to segments of the chain of investment, not to individuals in general).

> The only thing we can do is set up barriers to curb the risky behavior

No; there are plenty of other viable alternatives, like providing mechanisms to insulate unwilling third parties against the risk-taking activities of others. Most public policy and regulatory intervention seems to do the exact opposite, however, and seeks to shoehorn everyone in society into a single uniform pattern of interaction, which, of course, exposes us all to the new systemic risks it creates and doesn't account for, and leaves us little room for escape.

Let's regard regulation as what it is: a flawed attempt to mitigate the downside of universal social systems in order to sustain those systems, and justify corralling everyone into them in order to maximize their putative upside. The problem is that it just doesn't work: at best we're reducing small and predictable risk impacts for massive and chaotic ones, which doesn't yield an environment suited to evolutionary resilience.

As in everything else, variation is the key to stability and survival, and top-down regulation of individuals' subjective risk judgments diminishes variation. We need lots of separate baskets to put our eggs in, not one giant over-engineered basket that's ultimately no more unbreakable than the Titanic was unsinkable.