Loan Standards Are the Big Unknown

Hard to imagine this good a ride without the banks, but that's what we have happening. The banks are getting killed by little M&T (MTB - commentary - Cramer's Take) and I can't blame them. Anyone who needs to sell loans, who doesn't want to keep them, is going to struggle unless the loans have 1. documentation and 2. real money down. I think many of the Alternative A loans don't have that.

But I don't know which ones do and which ones don't. The most unnerving thing about this whole period is that we really don't know what standards banks used. We act as if all loans are created equal, which is nonsensical -- as anyone who has gone through the process knows.

Just like the savings & loan crisis where the FSLIC backed up bad loans or you could just belly-up the S&L after cashing out, many of these mortgage brokers had no skin in the game other than shares, which they sold freely until the posse found them.

But I am surprised that M&T would have trouble given that it was supposed to be a good lender. I still don't believe that money down and good documentation lead to contagion.

I do believe, though, that we don't know who did what and we are in "shoot everything until we find out otherwise" mode.

Random musings: Just blown away by the Stockpickr portfolio and column that show how poorly performing some of the Dow Jones stocks have been since the millennium began. ... The Halliburton (HAL - commentary - Cramer's Take) buyback beckons now that the exchange offer is almost done.

TheStreet.com holds a minority ownership interest in Stockpickr LLC and serves on its Member Committee. Jim Cramer is a director, co-founder and stockholder of TheStreet.com. At the time of publication, Cramer was long Halliburton.

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