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Karl Denninger at Market Ticker on Freddie Mac’s announcement that they are finally going to stop buying and securitizing interest only mortgages:

“Freddie (and Fannie) had no business getting involved in these toxic self-immolation devices in the first place as they are intended to do exactly one thing – asset-strip the borrower by forcing him or her to come back after the interest-only period and refinancing.

In an environment where home prices are not advancing, however, such refinancing is of course impossible, which leads immediately to foreclosure…Say thanks to the government – both past and present administrations – for conspiring with our banks to literally fleece the American Citizen for the benefit of Wall Street.”

And the fleecing will continue, thanks to the Christmas Eve blank check from the Treasury Department.