The issue isn't that there are six "bad" banks, it's there are 13 "good" banks. All we need is a plurality of good banks to merge the bad banks into. Anything that creates bigger, more streamlined banks is a win.
Giving PNC (NYSE: PNC) (Cramer's Take) or Bank of New York (NYSE: BK) (Cramer's Take) or JPMorgan (NYSE: JPM) (Cramer's Take) or U.S. Bancorp (NYSE: USB) (Cramer's Take) some bad banks with some guarantees is terrific. Yes, it is true that Bank of America (NYSE: BAC) (Cramer's Take) and Citigroup (NYSE: C) (Cramer's Take) and Wells Fargo (NYSE: WFC) (Cramer's Take) may need capital. But think of it like this: If you think the banking environment is actually going to get better, you might be willing to buy some sort of convertible bond from these companies that lets you capture equity upside.
I do not believe people are thinking about the stress-test scenario right. We have been bereft of winners that can buy loser banks. By sanctifying some winners, we are going to give them some heft and bulk from scrubbed banks that fail, and you will have an even stronger system.
How can that be bad?
The press is portraying everything that Tim Geithner does as wrong. Where were they when he really was doing things wrong? Last night I pulled up with a banker who was marveling about how much money that didn't want in to the public-private partnership when it was first announced is now desperately trying to get in. But the press is still retreading that nothing good is about to happen. I think that's par for the course these days.
So stop focusing on the failures. Thirteen winners is more than enough to take us to the next level!
Jim Cramer is co-founder and chairman 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 was long JPMorgan and Wells Fargo.
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Reader Comments (Page 1 of 1)
4-30-2009 @ 10:26AM
JOE HARRISON said...
In November of 2007 he said we were going to 14,500 by Xmas. He is paid to be a cheerleader for the market which is a sham. The market has nothing to do with actual value any more. It wasn't worth 14,000 or anywhere near that. This is gambling pure and simple and the game is fixed!
4-30-2009 @ 11:02AM
dhcsmc321 said...
What we don't need is bigger banks. No bank should be to big to fail.
4-30-2009 @ 12:13PM
Steve said...
Everybody needs to read F.I.A.S.C.O. by Frank Partnoy, a former Morgan Stanley salesman. Fellow firm employees referred to complicated derivatives as weapons of mass destruction. They bragged about clients having their "faces ripped off."
This, folks, is what has happened to the investment world. Read it and weep.
4-30-2009 @ 1:42PM
GlobalDia said...
cramers right...its a good thing and no big deal that 3 out of the 5 largest banks in the country are undercapitalized....(rolls eyes). why is this guy still relevant?!?!?!
4-30-2009 @ 1:51PM
beachpaul said...
Cramer, are we going to 9,000 again?
4-30-2009 @ 3:11PM
cindy said...
So Jim when did you turn into a Socialist? Tired of hearing your up down and everywhere theory. I stopped watching your show as it shows now your in Obama's pocket.
4-30-2009 @ 3:32PM
al said...
I WAS a big, no very big Cramer fan, however on threat of banishing him to the Gulag, the Feds got to him.
Now just mush comes out of his mouth. What a shame, but I guess the Feds can eventually break anyone.
I loved the President's rant today on those "nasty, greedy" hedge funds and investment companies that did not care to settle for 30 cents on the dollar. I suppose this is the new definition of being unAmerican, you do not throw yourself on the collective good and give up your hard earned dollare so the UAW can now have 55% control of the "new Chrysler" corporation !!!
Forget all that stuff about the law, and free market choices that's old school. Besides it's all Bush's fault anyway
4-30-2009 @ 4:15PM
Pip said...
Look, the parrot on my shoulder just barfed a huge wall of irrelevant text.
4-30-2009 @ 10:10PM
Beltway Greg said...
Jim, bearish on Green Mountain Coffee Roasters? Ooops. It popped something like 19 points today. They're the Starbucks of the Adirondacks.
5-01-2009 @ 2:29AM
ij70 said...
"All we need is a plurality of good banks to merge the bad banks into."
Comrades, in USSR it was called SberBank.
5-01-2009 @ 4:21PM
Donato said...
This guy is not only mostly wrong, he's dishonest. Last night on his show he said he's been bullish since around 6500 on the dow. Not so Jim . Below is what you wrote on this site on Feb. 27. The next trading day the Dow was at about 6700. That's not 6500 and as you can see you were not bullish.Unless you consider selling short a bullish recommendation.
Cramer said. :
you don't have to have me drill it into your head to short it. The opportunities here on the short side are much better than on the long side. Still. I don't think that will change until we repeal all of the gains since the mid-1990s.
Only then will we get to prices where selling may simply not make sense. Right now, shorting makes all too much sense, so selling will certainly make sense.
5-02-2009 @ 10:36AM
JCH said...
If the year plays out within the range of the two stress-test scenarios, then all 19 banks will be fine. There is still enough money in TARP to cover it. Add to that the capital increases that can be achieved by converting preferred to common, and the additional money the Treasury will have if it allows non-threatening TARP recipients to repay their TARP. Treasury can sail through some fairly rough seas without going back to idiot conservatives, both Republican and Democrat, in congress.
If the year plays out worse than the range of the the stress-test scenarios, then more than 6 banks will be in trouble, but that will be the least of our problems.