It has no reason to stop it - nor can it. Most of the people who work for the treasury department and fed are former bankers
Again, you are explaining where the corruption comes from.
The reason to stop the idiocy of extending crazy loans is to protect those that have nothing to do with the process but have to bail it out when it goes wrong. The FED has the authority to change a lot the way banks operate, including the fractional rules and cash reserves. The FDIC, too. When banks fail, the FDIC pays if it can. If not, they will come knocking on my door again.
There is currently no benefit for the banking industry to cut down on easy credit.
You are not claiming that the banking industry is legally
free to do whatever it pleases and f*** the US government, which means the US taxpayers. Or are you?