You are treating it as a big brain. It's split many ways. There are many banks, they don't behave as a mass. Some will lend because they want / need the income.

Secondly most lending decisions are made by employees. Their interests are not aligned with the long-term health of the bank. They want their bonus. Who cares if it blows up in 10 years time?

We've seen this in 2008. Banks behaved insanely.

Finally if banks were playing the long game together why pump up land prices until they are backed into a corner? Better to drip to maintain throughput.