As the Fed Shifts, These Banks Will Get Crushed

Notice how the Fed never references or cares about the banking system? Notice how it is always focusing on oil-based inflation, even on Fed day? Notice how much the market right now believes in this thesis? Isn't this a great time to figure out which stocks you need to get out of into this strength rather than into the weakness? I think so.

So let's analyze the death-rattle stocks as the Fed goes through with what the top-down folks don't see. In other words, the top-down folks say that the dollar and inflation must be boosted and slain. Here's who just gets crushed and I think doesn't make it once the bias shifts.

First, Washington Mutual (WM - commentary - Cramer's Take) is simply dead on arrival with this bias shift. It is still making bad mortgages, and by the way, the Credit Suisse report that was bullish on housing yesterday has some astoundingly bad numbers on the first quarter's defaults -- yes, already -- by those who are putting up limited funds to buy, and that's Washington Mutual's unfortunate sweet spot. The private-equity guys I think will be hard-pressed not to walk away from this one, although the authorization of more share issuance yesterday will string out the collapse.

I see little to no hope for National City (NCC - commentary - Cramer's Take) and Huntington Bancshares (HBAN - commentary - Cramer's Take), which need some way to build equity and have been saying that bad loans are peaking. There should be a new round of bad loans if the Fed changes the bias and rates don't come down.

Downey Savings (DSL - commentary - Cramer's Take) and BankUnited Financial (BKUNA - commentary - Cramer's Take) -- the latter actually trying to raise money despite its dollar stock price -- are without hope, I believe, given the growth in non-performers, something that cannot reverse itself with a change in bias.

More important, even the bullish reports on homebuilders from CSFB yesterday cite incredible weakness in those markets. (By the way I suspect that Hovnanian (HOV - commentary - Cramer's Take) gets killed with the change in bias, but that's a homebuilder, not a banker.) Corus (CORS - commentary - Cramer's Take) should be another bank that will be hard to keep afloat with a change in bias.

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