Re: That is not what should be regulated
If they don't, they pay the costs and if they pay too much, they end up dying.
Sure, there will be a bit of a mess, but in the worst case customers will take their government-guaranteed money elsewhere and that will be that.
You seem to be ignoring just how unpleasant that mess can be for customers. In that period between "Oops clicked the wrong thing" and the Government paying out you've got missed mortgage payments (or missed rent payments), missed bills, potentially an inability to feed yourself or put fuel in the car to get to work.
All because some profit chasing fucker cut corners.
These measures aren't there to protect the banks, they're there to help protect the banks users.