More broadly, open market operations, in situations like that which followed the crash of stock markets around the world in  BIS Review 46/1997  -2-  1987, satisfy increased needs for liquidity for the system as a whole that otherwise could feed cumulative, self-reinforcing contractions across many financial markets.
Of course, this same leverage and risk-taking also greatly increase the possibility of bank failures. Without leverage, losses from risk-taking would be absorbed by a bank’s owners, virtually eliminating the chance that the bank would be unable to meet its obligations in the case of a “failure.” Some failures can be of a bank’s own making, resulting, for example, from poor credit judgments.