Mr. Hometown Banker is Not a Big Risk Taker. It would appear that many investors with speculative projects expect to walk into their Hometown Bank and receive approval for a loan of depositors money with alacrity. He is trained to lend within certain parameters to ensure his depositors money will be returned, with a profit of course. This anticipated profit is no less than what any other enterprise, like Prime Time Cinema or the Church of Rose Island expects. Should banks become high risk lenders, their interest rates would have to be even higher to compensate for the increased likelihood of a defaulted loan.
Interest rates are already under attack for normal lending.
I suspect not. Beside, banks do not expect to receive an equity position in the operations they fund. And they surely are not in business to collect unsold inventory or property. They expect to make a return on loans granted to pay interest to depositors and salaries to their staff and so on. I would suggest that the reason for banks and their lending practices are misunderstood.