The way I understood it is they have their acquisitions raise a lot of money through debt, pay themselves enormous fees out of that debt, and then do hail-mary plays to try to recover the company (which never, probably by intent, work) and then have the company go bankrupt. Pocketing the fees, etc which are in excess of anything they ever put in.

So let me get this straight: You think banks willingly loan PE firms billions of dollars so they can pocket consulting fees and put the company into bankruptcy?

That's completely wrong. The money put up by PE firms is more at risk than any loan received by a bank. Bain Capital, for instance, lost money on the Toys R Us buyout. The bank would not agree to loan money for a buyout without an explicit covenant that would prevent such shenanigans. The generated cash flow is used to pay down debt; the PE firm usually only makes a profit when it exits its investment.

Banks agree to loan to PE firms because buyouts usually work and PE firms are right when they believe they can increase margins. The extra debt load reduces the tax burden and makes the debt easier to pay off.