The risk is in loaning n money to 10 people (10n) without interest and one of them not paying you back, you only receive 9n back. You would have been better off not loaning it at all under every circumstance. Compare this to loaning 10 people n money and charging x interest, if one bails on you then you receive 9nx back, and lenders set x to ensure 9nx is higher than 10n.

I think I can see your guys point on not making loans for consumer spending or even a home loan, because they don't generate a cash flow, I'm not sure I'd call it evil but something does seem up with it. Loans for equity do make more sense.