This x1000Scaling up bandit parties with the player's level is ok, early on. It only becomes a problem when bandit parties become massive, on the order of bandit armies. Taleworlds needs to institute a cap on bandit party size. I think a max size of 30 seems reasonable.
Looters and Bandits should never be able to form large warband sized Parties. It's totally ridiculous to see what's essentially a small Army of 90 or 150 Looters at times. Where did all the hobos come from? And who's leading them? Spartacus?
I think Looters should technically be Clan Tier 0, only able to field 20 Troops or so. And Bandits being a little more organized should be capped at Clan Tier 1, only able to field 40 Troops or so.
It's one thing if many small bands are roaming an area. You can attribute that to "high crime rate". But when you've got actual warbands of Looters/Brigands that couldn't logically even supply themselves with Food - it makes no sense that they could exist. Also be nice to see Bandits/Looters raid Villages too.
Personally I think Bandits should only spawn from Hideouts (not sure if this is the case already). So if you're vigilant you can at least keep your lands relatively safe. Might not be a bad idea to make Manhunters a thing again.
Also I feel like Looters should only spawn from Raided Villages. That would make raiding potentially more devastating - as not only are you hampering production/recruitment, but you're also making the territory more hazardous in general. It's just odd all these hobos keep appearing out of thin air. Shouldn't there be some actual causal effects that spawn them?
Only problem I see with this is Looters are essential to early grind. Though I think Bannerlord relies too much on grinding mechanics. Should be other ways to train up low-tier troops without slaughtering 1000s of hobos.
Bonus - spawns seem a little ridiculous still:
I've seen truly ridiculous amounts of Steppe Bandits out in Western Khuzait lands, unfortunately no screen cap.