TAF Undersubscribed. Seriously?

The results of the TAF are out and they are perplexing to say the least.  The stop-out rate was 1.39% with only $138.092 billion submitted out of the total of $150 billion in funding available.  1.39% was the minimum that dealers were allowed to bid and comes in roughly 300 basis points BELOW Libor.  The maturity date of this loan is January 2, 2009 so it covered year-end.  I find these results to be incredibly perplexing.  If dealers are desperate for term funding, particularly over year-end, why was this auction not oversubscribed?  Any bank with room in their balance sheets should be purchasing assets at Libor and then shoveling them to the Fed through the TAF.  In any event, banks are getting a great financing deal with two-month money coming at 1.39%.  Does the Fed really even need to ease?  Other thoughts and comments are welcome.