It makes sense for banks to require counterparties to take on derivatives to reduce the counterparty's exposure. This means the bank sells protection to the nonfinancial counterparty, and it's the bank's job to hedge, distribute, the resulting risk in the financial markets. That's not what has been done. Counterparties have been encouraged to sell protection to the bank, or equivelently, to take on additional risks in order to reduce the headline borrowing costs, often with assurances of the kind of "what can possibly go wrong?".

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa