In a year's time, weirdly there isn't 24 million cash profit to pay off the "cheap loan" and the company go bankrupt. In hindsight it's obvious the "profit" was illusionary. Your million dollar "performance" pay for orchestrating this is securely in your personal bank account, the auditor's million dollar "consultancy fee" in theirs, and employees, the tax man, and shareholders are left with nothing. Yet another "success" for capitalism.
Yes... except the risk of this happening is theoretically priced into the interest rate on the loan. If it’s dirt-cheap it must also be a low-probability scenario. (Not that I necessarily disagree with you on principle.)
That's the theory, but that assumes all stakeholders aligned incentives (or it ignores employees as stakeholders). In the real world it is far easier to fire lots of employees than it is to stop paying the bank loan. So being only sort-of wrong by giving a company a loan they can't quite afford to pay back doesn't hurt the bank at all - they still get their money.
The entity "pricing" the consequences has few consequences if they get it wrong, so why wouldn't they err on the side of doing more business and making more money?
