Let me first discuss the bank incentives. Only a bank that fears losing its deposit base or 1/6  BIS central bankers' speeches  incurring the wrath of its shareholders is likely to recognize losses in a timely manner. In many of our banks, such market discipline is simply not present at the moment.
In the early years of the Great Depression, the United States was on the gold standard and the Fed could not easily adjust the quantity of bank reserves. As a result, the Fed did not engage in broad-based lending during the 1929–33 period. Nor did it cut interest rates aggressively.