A collapse of several banks/insurance companies would trigger a run on the remaining banks, complete break-down of business lending, mass bankruptcies among non-financial companies, mass layoffs, civil unrest, sky-rocketing costs of servicing state debts, drop in foreign capital inflows, currency devaluation and likely default on government bonds leading to more misery. The crisis would be world-wide, affecting international trade and investment and well-being of billions. The costs of doing nothing would be enormous.
Markets is a complex nonlinear system that can go into a state of positive feedback -- trouble would breed more trouble. So US central bank tried to stop this vicious circle from developing by preventing Wall street from collapsing.
These measures may still fail, primarily because earlier the Fed did not do anything to prevent said positive feedback when markets and investment risk appetites were going up (also known as 'the bubble').
Populist soundbites on HN always surprise me.