Your implied point about expected utility is way off but...

Suppose someone offers you a (single trial) gamble A in which you stand to gain 100k dollars with probability 0.99 and stand to lose 100M dollars with probability 0.01. Even though expectation is -98999000 dollars, you should still take the gamble since the probability of winning on a single trial is very high - 0.99 to be exact.

I would take it. I will probably gain $100k and if I lose $100M then I will just declare bankruptcy. This is approximately the decision banks make when they take irresponsible risks and can be expected to be bailed out by similarly irresponsible government.