IE8, IE9 Favorites - Can the folders be contracted?

This is an old problem--I've been waiting for Microsoft to change it back--ha.

I have many favorites links and subfolders. The current arrangement of favorites in the IE drop-down list is to have the entire list expanded. It is extremely hard for me to add to my favorites anymore due to the visual confusion. Now I just drag the address from the address bar to the Favorites side pane.

Now, Mirosoft has the favorites pane appear on the right side of the screen, then popping to the left side of the screen when you pin it. I don't know whether to laugh or cry.

But...perhaps there is a way to compact the Favorites drop-down list that I don't know of?

Or...has a software been developed that restores the old style of the Favorites list? Thanks!