TheStreet.com's Jim Cramer says that rather than merging, these banks will have to raise money through dilutive offerings.

The big difference between 1990s bank implosion and this one is that nobody at other banks sees any value in owning the ones that are faltering.

Key (NYSE: KEY) (Cramer's Take) is the latest example. Key's everywhere, it is grandfathered to be in every state. You would think there was some bank out there that would want it. Nope. No one. So they have to do this down round that destroys the common. Nobody wants Sovereign (NYSE: SOV) (Cramer's Take) either. Or Nat City (NYSE: NCC) (Cramer's Take). Or Washington Mutual (NYSE: WM) (Cramer's Take). The latter's really interesting now that Hudson City (NYSE: HCBK) (Cramer's Take) has passed it in market size because it says that all of those branches and all of that deposit base just doesn't mean anything. Or worse, the losses are so bad that unless the Fed takes the losses and puts them on its balance sheet, there can be no consolidation.

Yet consolidation is the only way to go. Now, we are much more laissez-faire then we were in 1990. The administration then felt engaged to move quickly to set up mergers instead of the charade of down rounds. I call them charades because none of them yet has produced a return for anyone who has put the money up.

TheStreet.com's Jim Cramer says they won't fail, but they can't be bought yet.

What do the words "we have enough capital" mean? It means get ready for an offering. Merrill (NYSE: MER) (Cramer's Take) last week said they had enough capital. So did Citigroup (NYSE: C) (Cramer's Take). Of course they left themselves some sort of out. Merrill said it had enough "equity" capital, so it did a huge preferred deal. Citigroup stressed that it had more than it needed, but they just made you look like a moron if you bought stock the other day at $27.

But if you did buy, I have no sympathy for you, none whatsoever. I have no sympathy for you because I have said over and over again that as bank stocks go up, they must issue equity until housing stops going down. Every uptick must be met by equity if the downcycle is elongated.

TheStreet.com's Jim Cramer says you can call him all the names in the book, but he's right, and the shorts know it.

It was a cause I didn't want to take up. I didn't want to take it up because I knew the short-sellers would paint me as a naïve, clueless defender of the bull, and the long owners wouldn't really understand the idiosyncrasies of the subject. It was a cause I knew the brokers would never defend because their best business that is left is prime brokerage, and they need giant hedge funds to trade with them and can't risk alienating them.

I am talking about the uptick rule, the 70-year-old rule put in by the SEC to stop the process of "raiding" stocks, meaning sending them down by knocking all bids down underneath to where panic could and would ensue.

Today's typical. The Journal breaks its seeming 10-year embargo on mentioning me or my show with a piece that basically says I have no idea what I am talking about and am a fool to bring it up. It quotes James Bianco, from Bianco Research right after me saying, "Anyone who thinks the removal of this rule is somehow causing havoc in the financial markets is hopelessly lost in the bark of one tree and may never be able to see the forest." He then goes on to say, "To suggest that the removal of this rule is causing the markets to go down is to loudly announce, "I don't understand the credit crisis and I am incapable of ever understanding it.'"

TheStreet.com's Jim Cramer says investors should be negative, but they have to keep an eye out for rallies.

Have you looked at the charts lately? I still carry them around and, frankly, have been reluctant to sit down and look at one after another the way Helene Meisler has for years and years.

But I have forced myself to do so since this year began just to remind myself that this bear market is a vicious one and you better have a darned good reason to buy a stock because you are most likely going to lose money otherwise.

The charts are amazingly bad. The vast majority of stocks are simply awful. You eliminate the oils, the golds, the ags, you have nothing, I mean, really, nothing. You can see that an Avon (NYSE: AVP) (Cramer's Take) could rally or maybe a Coke (NYSE: KO) (Cramer's Take), and you can make a case for the utilities to bottom on interest rate compares but that's really about it. The banks? They all look like they have no bottom.

The banking and financial sectors have certainly taken their lumps amid the housing sector's correction, but that doesn't mean there aren't bank stock opportunities out there, and one bank worth a review is Hudson City Bancorp.

Hudson City Bancorp (Nasdaq: HCBK) is a community bank with about 110 branches in the Metropolitan New York area.

Analysts like HCBK's loan growth, ramping fee income, and strong cost control history. Best of all, analysts say Hudson should not be adversely affected by the secondary mortgage market and its incorrect pricing of loans because Hudson holds most of the loans it originates.

Further, margin spreads should increase in 2008, and charge-offs should be minimal. The Reuters FY 2007/FY 2008 EPS consensus estimates for HCBK are $0.59 to $0.82.

The risks? An inversion of the yield curve would hurt HCBK's results; competition is modest.

The First Call mean rating for HCBK is: Buy [13 firms]. Mean 2008 target: $15.50 [high: $18, low: $12].

Stock Analysis: Hudson City Bancorp is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from HCBK's shares. Sell/Stop Loss if you were to purchase shares in this company: $8.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

MOST NOTEWORTHY: Ford Motor Co, Advanced Micro Devices, Brocade, Netflix and Equinix were today's noteworthy upgrades:

• Bear Stearns believes Ford Motor Company (NYSE: F) could also benefit from similar deal to General Motors Corporation's (NYSE: GM) potential VEBA healthcare restructuring with the UAW. The firm upgraded Ford shares to Outperform from Peer Perform.
  
• Advanced Micro Devices (NYSE: AMD) was upgraded to Neutral from Underweight at JP Morgan. The firm expects AMD's Barcelona server chip will help close the gap vs. Intel Corporation (NASDAQ: INTC).
  
• Citigroup upgraded shares of Brocade Communications Systems (NASDAQ: BRCD) to Buy from Hold and added the stock to their Global Tech Conviction List on expectations for market share gains and margin upside in 2008.
  
• Thomas Weisel upgraded shares of Netflix Inc (NASDAQ: NFLX) to Overweight from Market Weight, citing reduced pressure from competitor Blockbuster Inc (NYSE: BBI), which could lead to upside in subscribers.
  
• Needham upgraded shares of Equinix (NASDAQ: EQIX) to Buy from Hold to reflect improving fundamentals and potential upside from the IXEurope acquisition.

OTHER UPGRADES:

• UBS upgraded shares of Sun Healthcare Group (NASDAQ: SUNH) and CSX Corporation (NYSE: CSX) to Buy from Neutral.
  
• Susquehanna raised Tween Brands Inc (NYSE: TWB) to Positive from Neutral.
  
• FTN Midwest upgraded Hudson City Bancorp (NASDAQ: HCBK) to Buy from Neutral.
  
• Bebe Stores (NASDAQ: BEBE) was upgraded to Outperform from Market Perform at Wachovia.