“The loans are NOT profitable if they’re defaulted. “
If I sell the risk to someone else then it certainly is profitable for me. They made the loans, reaped thousands in closing costs. Then sold the loans AND the risk to someone else. They made a lot of money with no risk.
Who ultimately got stuck with the bad debt? THE TAXPAYER. SO it was the government forcing banks to loan money to irresponsible deadbeats that caused the trouble - the banks were just the instruments that the government used.
Again. Do you think that the banks forced these deadbeats to borrow money they couldn't or more to the point never had any intention of paying back? This is like blaming the gun for the crime. It's the criminal that commits the crime.