The banks are still writing off bad loans where they must. GAAP has abandoned reason by abandoning mark to market accting, but the banks must still take principal losses on disposed of (reposessed) assets. Check current write offs and reserves for future write offs and you can see where the “profitbility” is going. Without the cheap money, the banks would still be insolvent.
If Mark to market accting was still required (or the off balance sheet vehicles) were required to be included, most banks would be in receivership