Are banks  putting the housing market into an induced coma so that the housing market  can recover??

The Housing Market Induced Coma: 

A temporary coma deliberately induced to reduce swelling of the brain after injury.  (Many people have been  kicked in the head by predatory lenders, lost jobs, and high gas prices.)

This (virtual coma) has been induced to break the constant overwhelming strain being exerted on the housing market by the severe viral effect of numerous sub-prime loans in default, and a host of other reasons.  

Perhaps inducing a housing market coma may stop the progression of foreclosures. Thus perhaps making it possible to reverse the wrongs which needed "correction" and to start  recovery.

Why aren't banks dropping prices on their foreclosured properties?

Sellers (including banks)  can ask any price for their property, but Buyers set the price of a property when it closes. 

A reasonable price may be much lower to a Buyer, and if accepted by a Seller or Bank will drive down the prices of all comparable properties, foreclosures or not.  Foreclosures will sell faster, but home values would continue to drop, and probably at a much faster rate. 

If the value of properties started to drop (at a faster rate), then those people who are just getting by, and have mortgage payments they can barely afford may decide to "walk away" because the properties are worth much less.  This would create even more foreclosures!

"...If the downward home prices pick up speed, and foreclosure prices drop faster, when the housing market finally hits bottom, it could hurt the economy a lot more."