It is then also tempting to write out loans to people who cannot pay them necessarily back (I'm not 100% sure, but I think that the risk of default goes with the security). That's blowing bubbles in the mortgage market, and increasing indirectly the price of housing and land.
AIG, considered "too big to fail" sold them default insurance that they weren't "big enough to honor" without the fed bailing them out. Remember, they gave themselves bonuses for pulling off that scam after 2008.