yes. that is called leverage. i set that aside in my post (poss during edit). a lot of the money that governments lend to banks at cheap rates gets levered into mortgages.
one of the main controls governments placed on the banks was to reduce the leverage they can employ. expanding leverage is one of the key ways banks created the mess. they did so to improve their profits and hence ceo pay. the price was paid by society in the form of increased risk. and its consequences.
that is why i have said that compensation models are one of the root causes of the problem. for myself, i think manager bankers should get fixed salaries.
hopefully we are not so dumb as to allow them to do the same thing again with leverage for a while.
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