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According to this article, it's worse than that, we're lending money not to banks, but to hedge funds, PE firms, and REITs: https://wolfstreet.com/2019/11/06/whats-behind-the-feds-bail...

These firms than use the cheap money (interest rate < 3%) to make leveraged bets on risky assets (mortgage backed securities, CMOs, etc).

so? What could possibly go wrong? :-)

... and received $351 back the next morning.

Wow thats a crazy way to look at it...

Do these "loans" ever get paid back?

Yes, the next day. Sometimes they get rolled over, but that's why you watch the trend in the repo market over time.

If these loans didn’t get paid back, we’d have another crisis.

From 870 billion in 2008 to 4 trillion now.