I don't know about stupid and incompetent, but you're entirely wrong as to the fundamentals of the 2008 financial crisis.
It's nice to make this about individual responsibility, but that's just not what happened. You probably heard the terms "credit default swap" and "mortgage derivatives" but didn't understand them. Essentially what was happening was major financial companies found that they could package up a bunch of low-rated mortgage-backed securities, hide the information about the individual loans, and turn a bunch of shitty loans into an AAA-rated security, and then trade the risk to someone else. Moody's and S&P were getting their cut from rating these things, and did not even have the information to be able to rate them properly. Then we have the credit default swaps, which were a little-understood and unregulated market, but essentially a way for companies to trade debt as if it were an asset, specifically all of the risk they were exposed to as part of these MBS deals. The concept of trading debt as an asset is not new, but it really only works when you have a good idea of how risky the debt is. There was a booming market[1] in these credit default swaps right up until the first wave of foreclosures hit and the MBS market started crumbling, and then whoever was left holding the bag got screwed.
Banks generally don't do stupid things, even when the government wants them to. They sure as shit don't advertise things that are going to lose money. There were a lot of people with a vested interest in pinning this on the individual consumer and the government, but the seeds were sown with the repeal of Glass-Steagal. The federal loan program ticked along quietly for over a decade, but the mortgage market exploded due to the derivatives market. Taking a shitty subprime mortgage and packing it into an AAA-rated security was like printing money. There was no governmental obligation to offer NINJA loans, for example, and yet Wikipedia has a lovely advertisement offering free money to essentially anyone with a pulse. The loans peaked in 2006; 2008 marked the first round of foreclosures.
Wikipedia has a good but lengthy article on the subprime mortgage crisis, and "The Big Short" is a good read that covers the origins and fallout of the crisis. You can also read the Financial Crisis Inquiriy Commission report. In point of fact, reading anything about the subject would be an improvement in your understanding; your specific theory has been destroyed in any number of sources. It's a complicated subject, and to be honest the exact details of a lot of these things escape me, but you have seized upon a simple answer that suits your preexisting beliefs. Start from the evidence and work backwards instead -- why did Bear Stearns collapse? It wasn't because they were issuing mortgages. This will save you from looking like an ignorant Wall Street stooge in the future.
[1] "The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion"