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."

Another possibility is that this is a step toward eventually shutting down these troubled and trouble-making GSE's. On August 17 of this year, the U.S. Treasury changed the terms of its bailout of Fannie and Freddie. As reported by NBCNEWS,

"As part of the new terms, Fannie Mae and Freddie Mac will be required to reduce their investment portfolios at an annual rate of 15 percent instead of the previous 10 percent. That will put each of them on track to cut their portfolios to a targeted $250 billion in 2018, four years earlier than planned."

With Fannie Mae's investment portfolio valued at $673 as of the second quarter, and Freddie Mac's valued at $581 billion as of June, the two GSE's must sell a total of $754 billion worth of mortgage securities in order to reach the goal of each holding $250 billion. By purchasing $40 billion of mortgage securities a month from the GSEs, the Federal Reserve could help the GSEs reach this goal in 19 months.  The NBCNEWS goes on to report that "the Treasury said the changes would accelerate plans to eventually shut the companies down."  If that is the true goal of QE3, it would take the Federal Reserve less than three years to accomplish it.