TheStreet.com's Jim Cramer says the fresh troubles for IndyMac make it more imperative for the Fed to act.
We keep coming close to losing these companies that are fighting for their lives.
Yesterday we had First Marblehead (NYSE: FMD) (Cramer's Take) on student loans.
Is CIT (NYSE: CIT) (Cramer's Take) next with its student loan portfolio (as opposed to its mobile home portfolio and its subprime portfolio...sheesh!)?
We obviously had a giant problem with MBIA (NYSE: MBI) (Cramer's Take) over the amount of capital it needs to raise. Will it have to raise capital and cut the dividend?
Does anyone really think that Ambac (NYSE: ABK) (Cramer's Take) or PMI (NYSE: PMI) (Cramer's Take) or MGIC (NYSE: MTG) (Cramer's Take) are better capitalized than MBIA?
Today we have auto loans in the hot seat. That's GMAC, oh man, on top of the subprime loans from its RESCAP subsidiary. I still can't believe that Cerberus owns half of that financing arm plus Chrysler! And it's Capital One (NYSE: COF) (Cramer's Take), which is so troubled from credit cards. And now this morning it's the lender to the star homebuilders, IndyMac (NYSE: IMB) (Cramer's Take), which has been the most vocal about how not to worry because, after all, we are IndyMac and we know what we are doing. That one's run by Michael Perry, the man who took a shot at me on his conference call, suggesting that I believe people default on one home and then go buy another. No, Michael, they default on one of your loans and then they go underground.
Again, IndyMac, with its big dividend, is just a sitting duck.
All of these issues are cured by one thing: lower rates. It doesn't make things so these companies can earn a lot of money. It does keep them afloat.
The urgency of this moment continues to grow. The rate drumbeat continues. And we just have to hope -- there's that dangerous word again -- that the Fed listens.
The federal plan? It's a start, if only because it keeps the pressure on the Fed. It's nothing else than a start because it is way too convoluted and way too difficult to implement, even as it sounds like something that could deal with the problem with $200 billion in taxpayer cash to make it up to the bondholders.
Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in stocks mentioned.
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Reader Comments (Page 1 of 1)
12-06-2007 @ 1:31PM
Nicole said...
What I don't understand is why isn't anyone in the Media shouting at the tops of their lungs.."BUY REAL ESTATE. NOW IS THE PERFECT TIME FOR BUYERS. Prices are low, interest rates are low. BUY HOMES!" Then, people won't be so scared to get a mortgage, buy a house, and actually they will enable the market to gradually increase again promoting home sales prices to increase - what we all very much need! THe media has been dying to burst the Home Sale Bubble for years. They finally did it and now look at what has happened. I say get the Press to write positive stories that will help our housing economy!
12-10-2007 @ 4:38PM
Jackie said...
Great point Nicole. If more people buy then prices stop sliding and we may even see credit start to loosen up. The biggest problem with the credit crunch is there is NO EQUITY in properties because values have declined. People need to buy, buy, buy, buy. Rates are so low and there are SOOOOO many opportunities, it's crazy not to even consider it. I did!!!!
1-02-2008 @ 7:09PM
Steve said...
Jackie and Nicole...Tell me, how many homes are you going to buy right now? Or how many homes do you currently own? Where are these buyers you mention? Your points are well taken but the problem is the lack of liquidity thats available as I'm sure you already know. No money availability means no buying on a grand scale. The banks need to mend and I'm afraid that will take some time. People are getting poorer. But don't fret too much though girls...the fed is working diligently to print up more money soon to be available at your local Wal-Mart stores at unheard of prices. All this addtional cash will abruptly bring up the prices of homes. (As well as everything else too) Striking employees demanding wage increases are soon to follow. We're in for a wild ride.