Waking Up From the Bank Nightmare

Is the banking crisis now past its peak? We have to wonder with tonight's pricing of 825 million shares of Bank of America (BAC - commentary - Trade Now) tonight at $10 after the close, a deal that appears tight as a drum. I have friends who put in for a million and are getting 25,000 shares. That's amazing considering the size of it. The deal actually appears to be stronger than the awesome Ford secondary.

Adding up all of the money that BofA has raised -- $13.5 billion in at-the-market offerings, $10 billion in assets sales and probably $7 billion in earnings over the next few quarters -- the roughly $30 billion and change that the government wanted BofA to raise under the stress test has been virtually realized. I am sure there will be some concerns that BofA will have to convert some TARP money in preferred stock into common stock, but it will be minimal and the company could be home free.

When you consider that the banks were all down at the end of the day, probably because some people got wind of a "bad" bank event, we could be ready to have another leg up of the bank rally since BofA is the last big bank that needed to raise money.

I have been writing that BofA is the key to this market. If there is a bank in trouble, if there is a bank that the regulators are worried about behind the scenes because of the questionable acquisitions of really troubled institutions Countrywide and Merrill Lynch at very high prices, it is this one.

If this stock can hold the $10 level tomorrow, we will be through with the long national banking nightmare. I do not expect the not-so-hot banks to rally big from these levels, but I do believe that once TARP is paid back and housing bottoms, which I think will be soon, and once the earnings come through because of all of the net interest margin banks have on lending get figured in to the numbers, we are going to have institutions go back over this group and pick among the winners the way they did in 1990.

If it holds, we are golden.

If it doesn't, buckle up because they will all be for sale for the time being until things settle, not unlike the day after the successful Wells Fargo (WFC - commentary - Trade Now) offering. But I will be very surprised if people aren't up instantly on the deal and that the afterglow will sweep the bank group at least back to where it was Monday -- if not higher.

At the time of publication, Cramer was long Wells Fargo.

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Know What You Own: Major financial stocks include JPMorgan Chase (JPM - commentary - Trade Now), Citigroup (C - commentary - Trade Now), US Bancorp (USB - commentary - Trade Now), Deutsche Bank (DB - commentary - Trade Now), Morgan Stanley (MS - commentary - Trade Now) and Goldman Sachs (GS - commentary - Trade Now). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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