I'd flip that around: whether it will lose money off the credit, not whether it will make money. Based on my time in credit risk this is more accurate to how banks actually think about loans. The upside for each individual loan is much smaller than the downside, so the threat of loss dominates the discussion.

Once you flip it around like that it becomes much less attractive to think of forcing banks to make loans that they expect to lose money on.

> if not a democratic oversight, at the very least a clear set of democratically chosen rules over what kind of loans should be given.

Which, again, we already have. There are many rules and regulations about what information banks may and may not take into account when deciding which loans to approve, and what interest rate to charge. Rules put in place and enforced by the democratically elected government.