I think you are getting to the core of the issue, which is that when the underwriter is decoupled from the result, they must either be regulated or their custom

I think you are getting to the core of the issue, which is that when the underwriter is decoupled from the result, they must either be regulated or their customers (the real creditors) must have skin in the game. The regulations have been ineffective (so far), and the creditors have always been bailed out; we should not be surprised that creditors are unscrupulous about lending to questionable borrowers.