Is QE 3 Really Just Another Bailout?

At a time when mortgage rates are at historic lows, home prices have fallen, and previous overbuilding leaves little room for growth in employment in the housing industry, why would the Federal Reserve suddenly decide to purchase $40 billion worth of mortgage securities a month supposedly in order to stimulate the housing market and thereby create more jobs? So wonders Dr. Jeffrey Herbener, Professor of Economics a Grove City College.
His answer is that the public narrative that this move is for the sake of helping unemployment is a fiction, and that the move is really "another bailout of the holders of mortgage-backed securities." These are primarily Fannie Mae and Freddie Mac, which according to Professor Herbener presently hold $2 trillion and $1 trillion worth of these securities respectively.
The Washington Examiner is likewise skeptical of the public narrative, but sees the move as being for the sake of the banks that sell mortgages to Fannie and Freddie.

"When the Fed buys securities from Fannie Mae and Freddie Mac, those agencies can then offer lower interest to banks like Wells Fargo and Bank of America that actually give mortgages to homeowners. But according to data compiled by Businessweek, the banks are not passing the savings onto mortgagors. Interest rates for home buyers are down but not nearly as far down as the rates the banks are paying. Therefore, the vast majority of the Fed's printed cash is going straight into the wallets of the banksters."

Read more: http://www.americanthinker.com/blog/2012/09/is_qe_3_really_just_another_bailout.html#ixzz27r3D3bLN