I took a class several years ago when I became president of the small credit union that my company had. One of the laws back then was that the lender took some of the liability if they gave credit when credit wasn't deserved. There was accountablilty. That changed at the urging of lending companies and banks.
We used the 3 C's of credit. Character (past history of payments) Capacity (the ratios of debt to credit) and Collateral (if the loan was big enoough, what was being given that would compensate if they loan went sour). Those are no longer used.
In addition, there are severe predatory lending practices going on that lure people with sweet credit only to have it turn against them with a late payment or some other ability to change the rules as the months go by. That needs stopped.
Granted, too many people who don't deserve credit are getting it and if they don't then it's not their fault but a mean old nasty lender. But then business people should be making business decisions.
One other thing. A friend ran a company. They tried to get loans for legitimate purposes. The loans were small, but had the ability to meet all payback obligations. A banker told them they needed to do bigger loans in order to get funds as small loans, while sound in ability to repay were not rewarding enough to do business on. The friend went out and arranged a purchase that made no sense at all, would never work out could never be repaid, yet he had leanders begging to do business. We he got the loan, failed and in the workout got to keep the assets that were profitable and gave the bank the dogs. HE then sold the profitable properties and made out like a bandit.
You're right that almost all of us can get more credit than we can ever repay. Some of us (like your friend) take it. That's one of the reasons that credit is so expensive.
We really need to start thinking about credit as a purchase. It's not a right. It's something we buy when we think we need it. We pay for credit when we want to buy a house, and many do for a car as well. The total amount we spend for those things is astronomical compared to the purchase price. Most of the cost is credit. But it mostly makes sense.
There are people who don't think about it at all, and those are the ones who will be paying for their Starbuck's coffee for the next 70 years. And those are the ones that everyone is getting so teary eyed over. Not me.