Maybe computerized trading isn't the problem, but the solution?
businomics.typepad.com
businomics.typepad.com
Normally not too much of a problem --- except when the market-makers pull their quotes, the stat-arb guys stop arbitraging, and all the other kinds of buy side "computerized trading" guys get out of the market and run away scared ...
No such duty exists when latency > 1 sec (which it was on NYSE).
Any time you take the humans out of the loop you're playing a dangerous game. All software has bugs. All software fails in weird unexpected ways at the worst possible time. When its software that has significant real world consequences like influencing the markets, firing weapons or operating equipment that could kill human plant operators and making decisions at speeds that make human intervention difficult or impossible you're asking for trouble.
They knew they would make a lot of money once the market rebounded - they always do. They make money when the price changes, not if it goes up or down. These firms were probably trying to prevent the PR storm that they caused it.
Even though they could have possibly made it worse by pulling out, they would much rather that be the story and gain support than making a lot of money and being on the other side of a pitchfork mob.
Side note: Either way this doesn't mean that they don't control the market with such high volumes. Getting rid of HFT would almost require waining their volume over time to help transition to a completely new liquidity system.
This was risk management, pure and simple. The exchanges were likely to break orders (which they did) and broken orders hurt HFT.