In America, in the Home of the Brave, in democracy, how can this have been going on, for over three decades?

“Assets assigned the lowest risk [in 1988], for which bank capital requirements were therefore nonexistent or low, were what had the most political support: sovereign credits & home mortgages… A ‘leverage ratio’ discouraged holdings of low-return government securities” Paul Volcker “Keeping at It” 2018.

That de facto means banks can leverage more their capital/equity with government debt and residential mortgages than with loans to small businesses and entrepreneurs. 

That de facto means banks can easier earn risk adjusted returns on capital/equity with government debt and residential mortgages than with loans to small businesses and entrepreneurs.

That de facto means banks have been given incentives to hold more government debt and residential mortgages than when holding loans to small businesses and entrepreneurs.

That de facto means banks will hold government debt and residential mortgages against much lower risk adjusted interest rates than those charged on loans to small businesses and entrepreneurs.

That de facto implies bureaucrats know better what to do with bank credit for which repayment they’re not personally responsible for than small businesses and entrepreneurs with theirs.

That de facto implies residential mortgages are more important than loans to those who can create the jobs and incomes, by which make down-payments, repay mortgages, service utilities & live.

In America, in the Home of the Brave, in democracy, how can this have been happening, for over three decades, and no one objects?

What would its Founding Fathers have said?