It would be hard to say that the Wall Street banks are expecting the Fed to hold rates steady given the results of today's Treasury auction. Although they could hold the headline rate steady, and just continue to ignore their target and price debt well below that in their myriad interest rate welfare programs for the hedge funds aka Wall Street banks.
And just why didn't Treasury take any of those higher bids? Repugnant collateral offered? Stuff even Timmy at the Fed wouldn't touch as well? LOL.
This looks more like a capitalization problem, as in the lack thereof of quality capital and a surfeit of off the books rubbish, than a liquidity problem. A basic insolvency scenario.
Homeowners may be sitting on overpriced houses, but the banks are sitting on a mountain over overpriced and overrated debt instruments that they will not confess to or write off more aggressively.
All that cutting rates from here will accomplish will be to try and bury the problem under a carpet of inflated paper, hoping that the stench of rotten debt does not permeate the markets.
Remember all those snide comments that US economists made about Japanese banks and their unwillingness to write down bad debts in the 1990s? 
"Where such a shift in power is in favor of the governing elite, Power will achieve its murderous potential. It simply waits for an excuse, an event of some sort, an assassination, a massacre in a neighboring country, an attempted coup, a famine, or a natural disaster, to justify the beginning of murder en masse. Most state sponsored murder occurs under the cover of war, revolution, or guerrilla war, or in their aftermath."
R. J. Rummel