The banks don't care who they lend to because they are insolvent

Immediately borrowing the money you have just deposited (in a bank) results in an equivalent amount of money remaining outside the banking system and there are now new deposits. The money supply has gone up because the deposits are guaranteed. Creating debt, such as a mortgage, increases the money supply. You can put the money you have just borrowed back into the bank and your account will be twice what it was before, but you will now have some debt as well, and the bank is ready to lend again having received new cash. This can continue for as long as the bank is willing to lend, and if the bank charges less in interest than it is possible to make on an investment, perhaps in Treasuries, this is a source of free income. Once the bank is insolvent there is no reason not to continue to lend to people who will not be able to pay the money back.