The problem is that right now, whenever financial institutions get their bets wrong, they are too big to fail and the government bail them out with public money. If governments always bail out losers, then these overtly risk loving behaviours will never be punished and will just keep getting worse. Who would not bet everything they have if they know they can't lose?
I am not convinced the argument that if capitalists were allowed to take their loses then the economy will go into the dark ages. And this idea that loses from the banks are somehow more important than loses from the tax payers. Think it is just scare stories to get the tax payers to cough up.