Pain of Tighter Bank Credit Will Pay Off

We keep reading that credit is tighter for autos, it is tighter for homes and it is tighter for credit cards.

And somehow we think this is negative?

How do people think we got in this fix to begin with? How did Citigroup (C - commentary - Cramer's Take) get to $17 and Wachovia (WB - commentary - Cramer's Take) to $15--and now going lower because they are so easy to short now that the SEC has blessed unlimited punitive shorting again.

How did Capital One (COF - commentary - Cramer's Take), a primo target of shorts, get here? And why do you think Ford (F - commentary - Cramer's Take)and GM (GM - commentary - Cramer's Take) and Chrysler -although we know the latter is doing great, according to Cerebrus--got into this jam? How did we think that the homebuilders could lose so much value?

Easy credit. Too easy credit.

Do people think we will get out of this jam by doing more securitizing instead of less? More reckless "send the loans to someone overseas" instead of "oops we better make better loans because we now have to own them?"

Does anyone think that the answer to Washington Mutual's (WM - commentary - Cramer's Take) long-term longevity is more securitizing and less due diligence?

I have been a huge critic of the fed and the treasury about the laissez-faire attitude they have toward the collapse of the banking system as we know it. They relied entirely on a corrupted private sector to securitize loans and get them rated positively by companies like Moody's and McGraw-Hill (MHP - commentary - Cramer's Take). Those firms made fortunes dishing these AAAs out by the barrelful.

Can you imagine if we let movie critics be paid for recommendations? We'd fire 'em immediately. Then they actually believe that insurance would hold up under a downturn to keep the AAA ratings intact!

Now we have the market finally doing its job. We should celebrate it, even if it prolongs the recession because this nonsense must never happen again. Securitizing and the sloppiness that came with it is at the heart of these problems. The problems, as painful as they are, are now being put behind us.

I say terrific!

At the time of publication, Cramer held no positions in stocks mentioned

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