Of course the decision makers of the time did not consider such options, because they did not think there was a significant risk of losses on the scale that actually occurred. If they had pursued this course, it is clear that economic disruption could have been greater.
The net costs would have been lower, but arguably only by a sum in single digits of billions. To be sure, the larger policy errors were made long before the bank guarantee. Perhaps the most interesting counterfactual to be considered is to imagine that the bank lending excesses of 2004–2007 could have been eliminated by effective bank regulation.