Recall that a big part of starting the mess was a legal or pseudo legal requirement to offer housing loans to unqualified applicants on the grounds that banks were turning down loan applications because they were racist.
Despite how many times that claim gets repeated around here it isn’t true. The CRA is what is being blamed, and even if for the sake of argument we posit that it was what the CRA required it would account for only a small portion of the subprime loans that were made.
The CRA only covered deposit takers like your corner commercial bank. They were small time players in the subprime world.
The largest number and the most risky subprime mortgages were written by investment banks and pure mortgage lenders not covered at all by the CRA. The investment banks and pure mortgage lenders were writing these loans because Wall Street was using them to create CDOs and a raft of derivatives that were making everyone involved rich. At least they were rich until the bubble that they helped create blew up in their faces and took down the real economy.