Many Fed officials appeared to subscribe to the infamous “liquidationist” thesis of Treasury Secretary Andrew Mellon, who argued that weeding out “weak” banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were relatively small and not members of the Federal Reserve System, making their fate of less interest to the policymakers.
This list was already very large before the crisis, but we have enlarged it even further and now accept an even wider range of securities as collateral. Government securities account for only 44% of the nominal value of securities on the list. The rest are private securities.