The idea of lending money just so you can profit from its failure is caused by the affiliations between commercial and investment banks.
Not really. Most lenders into this mess never made a dime on the shorting. And most of the shorts’ beneficiaries never loaned a penny. Short selling pre-dates Glass-Steagall. Credit default swaps predate Gramm-Leach-Bliley.
https://www.nytimes.com/2020/08/24/business/mall-short-hedge...
And those home loans were allowed because Glass-Steagall was removed, is it wrong to think that although short selling has been around it has been exacerbated by the removal of Glass-Stegall into things like people's homes/livelihood and not just stocks?