So, you'd like the holder of the note to take a bigger loss than necessary.
The market should determine how big a loss is "necessary". Neither nor I are in a position to determine such a thing.
Rewarding people who make imprudent decisions is the same as punishing people who don't. What you are creating is an incentive for people who are otherwise hanging on to go ahead and default.
I would rather see a wholesale nationalization of the offending institutions - yes, coupled with civil service wage scales - and letting people who made bad choices live with the consequence of those choices.
Yes, no question there would be side effects for pretty much everyone. Well, too bad, these are the policies the electorate voted for. Multiple times.
And let's cut FDIC to $10k while we're cleaning things up. Large majority of people don't even have that squirreled away, which makes the entire thing one giant regressive tax. Anyone who wants to put money in unsafe institutions to chase half a point yield on a term deposit should exclusively bear the risk of that decision.
