The reality is that banks are not like ordinary commerical businesses. They also have a special role in the wider payments system for the whole economy. The CB is in a tough spot. On the one hand it cannot be seen as protecting banks from poor commercial decisions (and many here have rightly argued that this perception already exists), because this creates moral hazard issues in the future. At the same time however it cannot allow lending by banks to 'dry up' because short term near liquid assets (mortage backed securtities) have effectively become longer term assets (because these securities will eventually be worth money again when property prices in the US recover). If the latter occurs, this can cause all banks problems in meeting their obligations to their customers and to eachother which is really a huge externality of inaction, justifying the reserves actions, IMO.
