“The banks don’t care, they are only on the hook for 10% of what they loan out (fractional reserve banking).”
If a bank loan is defaulted on, the bank has to write off the TOTAL amount plus expenses. They lose the total amount. Nobody comes in and pays the bank the 90% you refer to.
In other words the bank literally creates most of the money it loans out od thin air as an accounting gimmick, less their reserve requirements.
Most money isn't printed by the government, it's created through bank loans.