They were probably running all kinds of scams. During the Panic of 1837, it was found that there were a lot of mortgages against slaves which apparently didn’t exist, or multiple mortgages against the same ones.
Except during reality checks like that, no one looked closely at it. The mortgages, good and bad (all evil) were bundled up in bond issues, bought by investors in the north and Europe, then lent out many times over through fractional reserve banking. It was too big to fail.
