You forget that it is the lenders responsibility to accurately calculate the risk involved to lend the money and then set the interest according to the risk calculated, or conversely exclude those individuals who represent too great a risk. This is called due diligence.

What the banks did was lower their lending standards intentionally so they could still make $$ on fees, then they passed off the liability of the risk through derivatives to retirement funds (maybe your retirement fund) and when that was found to be without collateral they got the government to subsidize their payment streams (bailouts) for the fraudulent instruments they made.

In some cases got the central bank to outright purchase the worst of the paperwork they fabricated at peak market values, that is at the highest possible price for dog crap before everyone realized it was all dog crap.

Meaning from the massive leverage they magically turned the sale of say $100 in loans (derivative) into $1000 in the fourth or fifth iteration of paperwork (leverage).