This is literally the definition of fractional reserve banking, used by almost every bank worldwide.
As a consumer (or a business client in the case of SVB), how does it benefit you that the bank doesn't simply hold your deposits in a figurative safe somewhere?
At a minimum, I wish I could say it benefits us by banking being free.
Lending could be opt-in. There could exist banks who charge a premium for simply being the custodian of your money. (These must already exist)
Fractional reserve makes money easily available to those seeking money they don't have, at the risk of depositors whose money they're putting on the line.
(For better or worse. I'm not for or against it. I'm certain there are massive benefits to the system. But the reality is the average depositor probably doesn't realize their bank deposits aren't actually theirs - and that's why we have the FDIC)
Loans are not always a bad thing.
If someone misjudges the value, volatility, etc, of collateral used for loans, those loans could be a bad thing if the borrower stops paying.
Banking is supposed to be a very boring business (at least under Glass-Steagal-like regulation). Making "bets" with money they don't have isn't something retail banks are supposed to be doing. Yes, we know that some banks were doing this prior to the '08 GFC, but wasn't that supposed to have been reigned in by the reinstatement of Glass-Steagal-like regulation since then? (of course, there is some distinction between retail banks and investment banks, is SVB the former or the latter?)
Retail banks absolutely underwrite loans.
https://en.wikipedia.org/wiki/Great_Recession
Here's some citation for ya.
As for viable replacements that allow for forward progress: https://en.wikipedia.org/wiki/Workers%27_self-management
(Also, for that matter, it's not like capitalism doesn't tend to devolve into autocracy and corruption)
The "alternative" you envision is premised on shifting power back to the masses, but I think it's also important to mention guardrails to prevent excessive capital accumulation. There would still be an economy, but it would be driven by a more egalitarian aggregate demand and less likely to suffer the shocks of boom bust cycles associated with financial malarkey.