I notice that Jim Cramer is yowling on TheStreet.com today, pounding the table on US Bancorp (NYSE:USB) and Webster Savings Bank (NYSE:WBS). Jim, how much you want to buy? These institutions are going to be shoveling money into the furnace for another 3-4 quarters. We’ll have a post up on TBP tomorrow on our view of the banks, BTW, including a profile for WBS.
In his latest rant, Cramer is once again showing himself the Goldman/Geithner shill. He attacks the FDIC, falsely claiming on the same clip that it is the fault of the deposit insurance agency for not resolving dead banks. In doing so, Cramer shows his ignorance and lack of homework — again. It is especially scary when Jim talks banks because, like most generalists, the only thing he knows about banks is how to use the ATM.
Let’s start with the basics on bank failure.
It is the primary regulator, Jim, OCC/OTS/state agency that pulls the plug on a bank. Only then is the FDIC appointed receiver by process of law. The FDIC has been trying to move the process along, but the fact is that politicians in Washington and down in the states, and the regulators at both the state and federal level, are dragging their feet.
Because once the bank charters are gone, communities will lose jobs and credit, regulators will lose jobs and in many cases there will not be a new de novo bank started in these locations. Banks are huge political engines in small town America.
Like Barack Obama and, apparently, Jim Cramer, the political class believes that eventually the storm will blow over and that we should be adding exposure to banks now. But no Jim, you are mistaken IMHO.
There are probably 1,000 plus banks in floating storage as of June 30, 2009. It was only until a few months ago that the FDIC finally had the financing and now the personnel in line to resolve several hundred banks in the next six months. But the biggest obstacle, dear Jim, is politics.
Jim, next time the boys at GS or Tim Geithner call and ask you to take a shot a Sheila Bair and our colleagues at the FDIC on TheStreet or CNBC, just know that I will put you into the boards every time. And I am looking forward to it with the greatest anticipation.
Here’s a challenge to Jim Cramer. If you want to talk banks some evening on your show, I know the way to CNBC HQ and will be happy to talk to the flock anytime you say. But are you able to “walk the walk” on the banks with an analyst who actually covers the sector? I don’t think you can.