Whyfor a big rate cut?

CNNMoney (although not the best financial analysis, with Lou Dobbs as their anchor) is saying that Wall Street is demanding a interest rate cut now, and far more than the 50 bps currently expected. The economy seems to be in trouble, and financial institutions are still announcing huge write-downs, so stimulus is necessary. But so long as banks are potentially low on capital, they will not make loans. Therefore, low interest rates may be meaningless. The main advantage of low interest rates is that banks can borrow from other banks or the fed instead of relying on deposits, so the high APY on deposits (4% or more) will disappear. Depositors will be forced back into the capital markets for yield (assuming their risk appetite returns), sending the market back up. Sounds like a fine fix for brokers/traders/fund managers, but I'm not sure whether it will stave off a recession.