Challenge to Jim Cramer: Let’s Talk About Banks!
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.
Why?
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.
Chris
July 29th, 2009 at 5:08 pm
Oh goodness. I remember when Chris challenged Tim Geithner. Now Jim Cramer. Thud.
July 29th, 2009 at 5:11 pm
Love to see the pit bull in action. Tear him a new one.
July 29th, 2009 at 5:12 pm
Give him Hell Chris!
July 29th, 2009 at 5:17 pm
Time to fade the banks. He’s such a contrarian indicator…
July 29th, 2009 at 5:32 pm
Amen to that Mr Whalen!
July 29th, 2009 at 5:34 pm
you would think Cramer would be a bit more chastened after his sit down with Jon Stewart-also-
his show is an embarassment- of course it is free advice- you get what you pay for-
I remember when he kept saying about a year ago it was time to “back up the truck” and load up on RAD- then around $5 or $6 a share-
now a bit over a $1- classic Cramer advice
July 29th, 2009 at 5:35 pm
This is pure silliness, Chris. Just last night Cramer had the virulently anti-Obama CEO of Cypress Semiconductor on Mad Money. I know because I called CNBC and told them I wouldn’t be watching Mad Money as long as Cramer pretends to know a damn thing about politics.
July 29th, 2009 at 5:42 pm
Chris – I hear what you’re saying, but Cramer loathes Geithner and mercilessly hammered him for months last year all the way up to his nomination and while they dithered on the bailout plan for Wall Street in Jan/Feb/March. Maybe Cramer likes Turbo Tim now because he bailed out his former firm Goldman and his other Wall Street elite buddies, but he certainly was no fan of Geithner up until this point.
July 29th, 2009 at 5:50 pm
franklin-
and if he had someone that hated the other party?-
would you have called CNBC then?
I can just see you putting down your box of Juicy Juice in a huff and calling the station-
I am certain they were quite frightened
July 29th, 2009 at 5:50 pm
who let the dog out
woof, woof, woof
chris, keep up the good fight!
July 29th, 2009 at 5:54 pm
OOOOOOOOOOOOOOOOOOOOOOOOHHHHH SNAP!
July 29th, 2009 at 6:06 pm
Interesting comment Mannwich. I guess the better point is to say the GS/Geithner agenda in Washington, which is to attack Bair and FDIC. Remember, Bair is not a team player.
That is the GS/Geithner mantra, IMHO.
July 29th, 2009 at 6:07 pm
And mega dittos to Pat G. These banks be DIVIDEND plays from now on dear friends.
July 29th, 2009 at 6:08 pm
@ahab
I don’t watch Mad Money for politics. Mad Money and Chris Matthews are on at the same time (and I know…both are GE), so if Cramer’s going to try to be a demagogue I have no reason not to switch to watching Matthews. At least Matthews knows politics.
And every time something like this happens, I make a small donation to my favorite political candidates. What we proved in 2008 with the election of President Obama was that you could multiply $10 by millions of little people just like me and finally challenge the money interests. =)
July 29th, 2009 at 6:11 pm
Agreed Chris. Sheila Bair is maybe the only one who’s not completely in the bag for the big players on Wall Street. For that, she deserves much respect. She’s clearly in an uphill battle in the administration. It will be interesting to see if she’s eventually pushed out. It won’t be easy going up against the likes of Larry, Tim, and Ben. I can’t see her winning that battle long term unless O steps in and decides to scapegoat that trio if/when things head south again.
July 29th, 2009 at 6:11 pm
I’d love to see Cramer with a tattoo on his forehead that says SHILL
July 29th, 2009 at 6:12 pm
And, just to be clear, like franjlin411 I do not watch the Cramer program. But his rants are top of Yahoo on the same pages that individual investors use to track their punts. So it does matter.
July 29th, 2009 at 6:15 pm
@f411: How exactly are “we challenging the money interests?” Please lay it out for me. I’m a little slow. As someone who was duped to give $700 to O’s campaign, I’m finding very little difference between his administration and Bush’s in that very regard.
July 29th, 2009 at 6:34 pm
Chris,
You should do it on Jon Stewart’s show, and kick that idiot Cramers butt.
July 29th, 2009 at 6:40 pm
@f411: “What we proved in 2008 with the election of President Obama was that you could multiply $10 by millions of little people just like me and finally challenge the money interests.”
Yeah, because the money interests didn’t donate to O’s campaign… yep. If you say it enough, it just might come true.
July 29th, 2009 at 6:50 pm
A little trip down memory lane with Cramer and the banks:
http://www.youtube.com/watch?v=_nkZ3eHeXlc
The guy that made the video drags it out a bit long but it’s worth the watch.
Franklin,
I’m going to have to second Manny on this one and ask how we are challenging the money interests? I don’t even get what you are saying. What about this?
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638
here is the one for mccain:
http://www.opensecrets.org/pres08/contrib.php?id=N00006424&cycle2=2008&goButt2.x=9&goButt2.y=8&goButt2=Submit
I think the employees at BO’s donor #2 are getting record bonuses this year and you just said a day or two ago you were worried about not being able to get a job. Come on man, you have to admit to some of this sooner or later.
July 29th, 2009 at 6:58 pm
@ben22: That’s the last penny I’ll ever give to any politician. It may actually be the last time I vote, period.
July 29th, 2009 at 6:58 pm
Pat G. Says:
July 29th, 2009 at 5:17 pm
Time to fade the banks. He’s such a contrarian indicator…
No doubt! Once heard if you shorted all of JC’’s long picks on his show, 3 months out you’d have made a great deal of money. Not sure if there’s any truth to this but from what “I’ve seen” , his stock picks are not that impressive.
@ Manny, don’t think you were the only one duped!
@ Chris… BA..BA..BA..Booya!!
July 29th, 2009 at 7:04 pm
everyone beat me responding to the same line-
“What we proved in 2008 with the election of President Obama was that you could multiply $10 by millions of little people just like me and finally challenge the money interests.”
I have to agree w/ Matt’s take- I do think little ‘ol franklin believe’s it’s true-
when franklin is putting on his Batman jammies at night and starts to swoosh around- I am pretty sure he thinks he soaring above the streets of Gotham
July 29th, 2009 at 7:05 pm
LONG CHRIS WHALEN
FADE JIM CRAMER
July 29th, 2009 at 7:09 pm
Doesn’t Cramer start his show with something like:
“Hi, I’m Jim Cramer” blah blah blah “and I’m here to entertain you…”
People who prefer their investment “advice” in the form of a carnival sideshow replete with sound effects and props are morons.
July 29th, 2009 at 7:11 pm
We interrupt this blog with an important investment advisory:
Based on the recent recommendation of the highly suspected Jim Cramer we are adding US Bancorp (NYSE:USB) and Webster Savings Bank (NYSE:WBS) to our Back up the Truck List.
Submitted by,
Sheeple, R. Shorn, & Scheisson
Investment Advisors to the Gullible
July 29th, 2009 at 7:11 pm
emmanuel117 says:
LONG CHRIS WHALEN
FADE JIM CRAMER
ha, with leverage!
July 29th, 2009 at 7:14 pm
mannwich-
as I’ve said before- politicians are the very same folks you couldn’t stand in high school- if you have seen the movie “Election” w/ Matthew Broderick you will know what I am talking about- classic-
almost painful to watch- even though it is a comedy- definitely hysterical
July 29th, 2009 at 7:19 pm
anyone interested in his track record can find basically everything you want to know here:
http://www.stocktagger.com/
Stillaway,
I actually think the claim on the show or Cramer’s objective is that he isn’t trying to make friends he’s only trying to make you money.
entertainment would be way to accurate.
July 29th, 2009 at 7:26 pm
I’m actually having dinner with a U.S. Bank VP this evening. I’ll get his thoughts on that recommendation by Cramer. Of course, he works there and likely has stock, so I’m sure it won’t actually be a purely impartial analysis.
July 29th, 2009 at 7:28 pm
stillaway-
you are right my friend- Cramer is the equivalent of Michael Savage on talk radio- supposedly serious but in reality- not so much- all show- it’s all about them and their success in their respective mediums-
in a nutshell- Cramer is a huckster- and in a previous era- he would be doing a medicine show
July 29th, 2009 at 7:42 pm
ahab,
The really ridiculous segment is the Lightning Round. Rapid fire Buy or Sell recommendations. Perfect for the ADHD investor.
July 29th, 2009 at 7:45 pm
Mr. Whalen…
You are the man!
My only problem is that I utterly avoid JC’s program (as most everything else CNBC, NBC, MSNBC, FOX, or anything else), so I wouldn’t get a chance to see you pile drive him…
I suppose I could catch the highlights on YouTube or something…
When football season starts I’ll crank up the 56″ again…
CV
July 29th, 2009 at 7:48 pm
stillaway-
no shit- what is the point of that segment?- rapid fire decisions- to showcase Cramer’s incredible “financial genius” and his ability to master the facts in mere seconds- okay on a trading desk maybe- but for the folks at home?-
like I said- it’s all about Cramer
July 29th, 2009 at 8:13 pm
I would like to add that it has been my belief that all of CNBC are Goldman Sachs shills.
July 29th, 2009 at 8:47 pm
Where were the anti-Cramerites when C was less than $1 , BAC was $3 , WFC was $8 , USB was $9 ?
Give me a break
July 29th, 2009 at 9:07 pm
@StatArb
Thanks to the US taxpayer…C & BAC are actually still in operation…perhaps that won’t even hold forever…
So if Cramer want’s to go on TV and talk about lottery tickets to a public who believes in such things…FINE
Back in March? well, if I actually “watched” Cramer, I’d prefer him to say something like…
“Americans…I’m doing the stupidest most irresponsible thing right now, but BET YOUR LIFE SAVINGS on these institutions…Either you’ll LOSE EVERYTHING, or you’ll hit a 4 bagger…”
You decide
July 29th, 2009 at 9:10 pm
Barry-
What about the June 30th housing bottom that Cramer has called?
July 29th, 2009 at 9:15 pm
@StatArb
If I remember correctly back in March, he asked everyone to stay away from banks and the whole market. Although he changes his opinion about a stock or a market faster he changes his tie. I stopped watching CNBC 2 years ago. In fact I don’t have TV (aka idiot box). His advice is targeted towards an average American moron.
July 29th, 2009 at 9:18 pm
To give everything another perspective…
I’m surprised that Treasury/Fed/Obama are even still on the train that puffing up equities is actually a good thing at this point…
I mean look…
- China is clearly on the ropes here (they’ll do what they can so as to not lose their 2.2t dollars, but huge investments in US debt will not be forthcoming)
- So if BO want’s to spend more money on social engineering projects, he might as well suck some money into some support of Treasuries…
- Why not skim off some of the 40% profits many made in equities off the bottom (in an economy that has CLEARLY not improved in fundamentals since 666), and skim off a few more marginal basis point rags?
- Close 2009 with a song…
Note: I’m not suggesting that that will occur (because people are ALWAYS lazy, late, & stupid)…But that’s what SHOULD happen…
July 29th, 2009 at 9:21 pm
cvienne and manhattanguy-
good analysis re Cramer
July 29th, 2009 at 9:21 pm
StatArb, they were probably all remembering that time way back in 2008 when Cramer told a viewer to “buy Bear Stearns.” (It’s on Youtube somewhere.)
It’s amazing that Cramer would turn on Bair like that right after co-hosting a prime time special with her. What a reptile.
When should we expect these now profitable megabanks to begin raising dividends again? The last time they were trading in the teens, BAC had 32X the yield.
July 29th, 2009 at 9:27 pm
Ah, the joys of having only 2 exchange-traded banks as part of my regulatory portfolio.
Here in an unnamed New England state we’ve been able to watch the meltdown of the bigs with some serious [i]schadenfreude[/i]. Old-fashioned banking is still a profitable, safe, and sound business. On the flip side, my employer also regulates all of the non-bank lenders and mortgage brokers, so I’m not lacking for work in any way.
July 29th, 2009 at 9:33 pm
@CaptainNed
Wait until the European bank mess hits its dew point…
It’ll make the American Bank mess look like a walk in the park…
Can you spell BLACK SWAN?
July 29th, 2009 at 9:34 pm
…and THERE I’m not sure if they’ll have a “mack daddy” bailout system…
July 29th, 2009 at 9:44 pm
I think they don’t like Bair because she does her job. She’s the one that’s doesn’t give a damn. If you’re insolvent we’ll see you on Friday.
July 29th, 2009 at 9:47 pm
“If you’re insolvent we’ll see you on Friday”
AMEN………….RA
July 29th, 2009 at 10:01 pm
Cramer, it would seem to me, is just another of the so-called investing geniuses that just rode the big bull market to success. Anything you bought, just about, in the bull from 1982 to 2000 made money if you did enough of it. Any mistakes were washed out by the overwhelmingly strong updraft. But he was a disaster during the bear of ‘00-’02. Following his advice would have wiped you out, as Karl Denninger likes to point out.
He looked good again when the market went up again. But then we all know how he’s looked since late ‘07, until this massive rally which, once again, made anybody who bought just about anything look like a genius.
Yes, I’m sure he’s a bright guy with a quick mind, but he’s just another product of the great bull markets that is stripped clean in the bears. What will the next 5-7 years bring? It’ll be interesting.
July 29th, 2009 at 10:05 pm
That YouTube video that ben22 posted really tells it all. It’s just so easy to document his ridiculous calls, of course. But he apparently has no moral qualms about flip flopping around with no accountability, acting as if he’s gotten it all right, all along.
July 29th, 2009 at 10:22 pm
Lest there be any doubt about Cramer’s lack of integrity….”Was there anyone out there who more loudly announced this credit crisis before it happened than I did? ” — James Cramer, April 1, 2008
July 29th, 2009 at 10:39 pm
@Charlatan
Was that quote the day BEFORE or AFTER he told everyone to back up the truck on Bear Stearns?
I forget…(and for that matter WTF cares?)…The most utilitarian purpose that JC provides to humanity is that he has a media show that reaches the masses…DOLTS deserve to be stripped of their wealth and have that hopefully re-distributed to more productive things…
Efficiency at it’s finest…
July 30th, 2009 at 12:48 am
Chris, I really would like to see the sparring match, but really it should be on neutral territory. Not on Cramer’s show. Charlie Rose, perhaps?
July 30th, 2009 at 12:51 am
Three very good articles on China – first one deserves a hat tip to Ben who turned me (us) on to the site I found the other two from.
http://www.frontlinethoughts.com/article.asp?id=mwo072409
http://www.foreignpolicy.com/articles/2009/07/23/the_china_bubbles_coming_but_not_the_one_you_think
http://www.foreignpolicy.com/articles/2009/06/22/think_again_asias_rise
July 30th, 2009 at 1:14 am
Re: Thor Says (31 July 2008)…
Mucho Gracias for the links (especially on think again…)
Regarding going head to head with Creamer: it is analogous to attempting to wrestle a pig in mud, the pig actually enjoys the event.
It is rumored Ted Turner once said: Do not be a debtor to a bank…Be a Partner!
July 30th, 2009 at 6:40 am
Chris,
The problem with beating down Cramer is futility. You know those inflatable clowns with sand in the bottom? (see where I’m going…)
The phenomenon that you describe with banks is a much bigger problem. These banks that won’t die are propping up businesses that should die. They’re replacing the concept that “capital flows where it’s treated best” , to “we know where the capital needs to go.” That will be the death of capitalism.
So, we are keeping small businesses run by incompetents on life support, “until things get better”. Hopefully, you guys get ther irony….
July 30th, 2009 at 9:58 am
1) I used to like and respect Cramer. I read several of his books and learned a lot of useful things from them. Today, he just seems like a dangerous gasbag who likely has separated innumerable people from their savings via terrible advice.
2) The FDIC is my personal hero. My bank was told to raise additional capital or face possible takeover or closure this Fall. Their non performing commercial loans are off the chart. FDIC insurance premiums are roughly 5 or 6 times over last year’s expense. If it weren’t for mark to market changes,they would be in even worse shape. Huge layoffs barely dented this quarter’s numbers. And they paid large ‘retention bonuses’ earlier this year to senior management. It’s a basket case that will probably be under new ownership soon. Am I worried … No because of FDIC insurance.
July 30th, 2009 at 10:45 am
Cramer is a buffoon, but he is also a very easy target. I don’t know if Mr. Whelan trades or runs money, so in the interest of fairness…..we’ll back up his critique and asign him short position in the two stocks he mentions above……using today’s opening price:
Short USB @ $19.95
Short WBS @ $11.40
As always, performance trumps opinions.
July 30th, 2009 at 10:59 am
Just a small item:
The FDIC *is* the primary regulator for state-chartered banks. Yes, the state examines those banks, but they follow the FDIC. The FDIC has examination teams that go in and rate the state-chartered institutions (1 through 5) and issue cease-and-desist orders and sometimes lock the doors.
I worked in the finance/treasury department of a multi-bank holding company and we had banks that national, state, and thrift charters. We occasionally had unified exams (led by the regional Fed bank), but more often we had individual agencies come in.
The FDIC was nowhere near as thorough as the OCC or the Fed. The state examiners were a joke (one of the guys assigned to examine us had been fired from our finance department for his incompetence), and the OTS had bigger fish to fry. The FDIC guys just worked through their checklists; the OCC actually tried to understand our methodology. They also had a Washington office that knew how banks were run.
So Barry is wrong when he says that the FDIC only comes in after the primary regulator shuts down the bank. With state-chartered banks, they *are* the primary regulator.
July 30th, 2009 at 11:03 am
Whoops, it was Chris’ post. Sorry about that. Chris is wrong here. Which makes me think that he thinks he knows more than he actually does. Maybe not as egregiously as JC, (who’s show is entertaining, even when he’s wrong. I shudder at the though of him on Charlie Rose.) but still…
But we all make mistakes, don’t we?
July 30th, 2009 at 11:36 am
Cramer, was pushing JOE, in 05/06 @ the peak of the condo boom on the gulf coast. Both stock and P/E were through the roof. There was also a 24 month supply of units, with additional construction underway.
Have zero confidence in Jimbo.
Off subject SNV – Synovus has a couple of lawsuits pending and is on the ropes. There appears to be malfeasance, with Sea Island and other “preferred borrower’s”. This appears to be SOP for a number of regional community banks throughout the US -oh well
July 30th, 2009 at 12:23 pm
[...] Let’s Talk About Banks (TBP) [...]
July 30th, 2009 at 12:44 pm
Chris Whalen has an ego 1 million times the size of his intellect. He desperately wants to be one of the TV talking heads. As for analytical talent, who knows? But all he posts of this site is unfounded opinions.
July 30th, 2009 at 2:12 pm
“Chris Whalen has an ego 1 million times the size of his intellect. He desperately wants to be one of the TV talking heads. As for analytical talent, who knows? But all he posts of this site is unfounded opinions.”
I’d say the ego and the intellect are well matched. In any case, how do you know Whalen wants to be a “TV talking head”? Sounds like one of those “unfounded opinions.” I had always assumed he wanted to be Treasury Secretary — as he should be. If there’s a more qualified candidate — with the requisite intellect, analytical skills, knowledge base, and political skills (also very important) — he or she must be hiding under a rock somewhere because I’ve never heard of them. Tim Geithner was a poor, poor choice, as we have seen.
I don’t know Chris Whalen personally, or in any other capacity for that matter, but he clearly has the talent and the horse sense to be a true public servant. Of the many public voices througout this whole bailout debacle, he’s been one of the taxpayer’s best friends. Who else has argued so credibly for the resolution of zombie banks like Citi and Bank of America?
What’s your beef, mkkby? I’m curious. (You really work for Treasury, don’t you
July 30th, 2009 at 7:16 pm
People, it is an inside pump job that starts at the White House, over to Congress, on to GS, around the horn to CNBC, ditto all the main stream print media and finally to good ole Jimmy Cramer..