Throwing good money after bad?

I'm no financier or economist, and I'm the first to admit I know very little about the mortgage industry, but this housing bill Congress is about to pass sounds like one of the most stupid things I've ever heard. The refinancing plan in this bill would "let the Federal Housing Administration back $300 billion in cheaper new home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too risky for government-insured, fixed-rate loans."

Did you get that? Or am I the one not getting it? They are going to lend $300 billion to people who have proven they probably will not pay back the money. President Bush is planning to veto the bill, and I say, "Go, Pres!" At least somebody in Washington is demonstrating a little common sense.