Let me clarify what I meant earlier about the real mechanics here.

When the government backs 75% of a loan's value against default, it creates a perverse incentive structure. Picture this: a bank employee approves a $1 million loan to a relative's business. If that business fails, the government covers $750,000 of the loss. The bank still nets $1.75 million from a deal that went south—essentially turning a failed venture into profit.

This is how risk gets completely divorced from consequence. Once you remove downside exposure through government guarantees, the incentive to properly vet loans evaporates. You're not lending based on creditworthiness anymore; you're just arbitraging the guarantee itself. From the lender's perspective, the riskier the borrower, the better—because either the loan pays off and you make money, or it defaults and the taxpayer subsidizes your gain.

That's not lending. That's systematic wealth extraction dressed up as financial intermediation.