What is QE3 REALLY About?

These are thoughts of a smart friend of mine about the most recent round of quantitative easing.

"So I was thinking about why the Fed would be buying mortgage backed securities. They say it is to lower mortgage rates to spur the housing market, but that really doesn't make sense. The rates are near all time lows. I don't think people a putting off getting a mortgage because they are waiting for lower rates. It is because they have bad credit (from a foreclosure or short sale) or because they can't put 20% down. I don't see how the Fed buying mortgages helps either of these.
 The big question is who is the fed going to buy these securities from?  This will be the entity that gets the new money into the system.
 If it buys them from big banks, that is subsidizing them in the hope that they lend that money to people and businesses (and not bonuses)
 However, if they buy the securities from Fannie / Freddie, they are essentially giving the US treasury the money because those two entities were nationalized. So, every dollar that the fed gives Fannie / Freddie (US treasury) is one less dollar that the treasury has to raise in a bond sale (over 50% of which was being purchased by the fed anyway). It's actually worth more than a dollar, because the treasury would have needed to pay interest on those funds if they got them from a treasury security offering.
 This should slow the rate at which the treasury will need to issue bonds to get more money. Im sure the government will not admit it though. They will say something like "we made so much money from the sale of AIG stock, that the treasury didn't need to borrow as much,". This is an election year, isn't it?
Its also a useful policy to have in place before the "fiscal cliff" arrives at the end of the year.
 Make no mistake that this still expands the money supply. These dollars did not exist yesterday and tomorrow they will. It also doesn't matter if the fed buys bad securities and then writes them off. This is actually worse because overpaying for assets increases the money supply even more.
 The only bright spot would be if this action actually shrinks the assets of Fannie and Freddie so they can be shut down. However, if your goal is to spur the housing market, you would expect increased participation from those two entities, wouldn't you?"