Jim Cramer's Wall Street Confidential Dec. 11th
Fannie Mae (FNM), Freddie Mac (FRE), Washington Mutual (WM)
Cramer explained why aid for borrowers is not a moral hazard or a bailout:
“The companies that do mortgage servicing don't have the ability to renegotiate every one of these contracts," Cramer said. "It's better to do it en masse with the government's help so that the people who might fight this realize that they're fighting the government, but it's certainly no bailout." Cramer added, "We need to slow down the process because we don't want the bank examiners to shut down all the banks.”
He said it is a good strategy to tide Washington Mutual (WM) over with a few billion dollars until another Fed cut when it can start to be profitable again. He suggested spending $500 billion bailing out Fannie and Freddie, although Cramer added this kind of talk scares people. However, the only other alternative is if there is a sudden rush to buy houses.
Cramer reiterated his disillusionment of the Fed, which cut rates a half a point in the summer, and then felt it was “done.”
“Right now I think the Fed is torn between doing what would certainly be the right thing and doing the right thing incrementally over time," Cramer said. "What I'm saying is the more time you waste, the worse it gets. That's very clear from what's going on.”
Cramer said he wished it were the case that “if you were to put money in Washington Mutual in the big convertible that you don't expect to just lose money,"
Published By TheStreet.com
Cramer explained why aid for borrowers is not a moral hazard or a bailout:
“The companies that do mortgage servicing don't have the ability to renegotiate every one of these contracts," Cramer said. "It's better to do it en masse with the government's help so that the people who might fight this realize that they're fighting the government, but it's certainly no bailout." Cramer added, "We need to slow down the process because we don't want the bank examiners to shut down all the banks.”
He said it is a good strategy to tide Washington Mutual (WM) over with a few billion dollars until another Fed cut when it can start to be profitable again. He suggested spending $500 billion bailing out Fannie and Freddie, although Cramer added this kind of talk scares people. However, the only other alternative is if there is a sudden rush to buy houses.
Cramer reiterated his disillusionment of the Fed, which cut rates a half a point in the summer, and then felt it was “done.”
“Right now I think the Fed is torn between doing what would certainly be the right thing and doing the right thing incrementally over time," Cramer said. "What I'm saying is the more time you waste, the worse it gets. That's very clear from what's going on.”
Cramer said he wished it were the case that “if you were to put money in Washington Mutual in the big convertible that you don't expect to just lose money,"
Published By TheStreet.com
Labels: FNM, FRE, Jim Cramer, Wall Street Confidential, WM
posted by Stock Administrator @ 7:23 AM
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