CIT's Road Map

At last, a template from a financial: Dump the mortgages, including the home-equity loans, and it's full speed ahead. That's what CIT (CIT - commentary - Cramer's Take) did today, and it is very encouraging.

I have been fascinated by this company ever since they began to fall apart because their mortgage business was a gigantic black hole. I just didn't think that they could make it -- they had way too much home-equity loan, which is the worst kind of loan.

Suddenly Lone Star, the same outfit that bought Accredited Home Lenders last year, steps up and at a discount -- a big one -- buys it all! It is a remarkable transaction that actually may establish the benchmark for what bad mortgages are worth.

I think this deal will be studied as a way out for a lot of the banks with this stuff on the books. In other words, this is not a slow trade digout like Lehman (LEH - commentary - Cramer's Take) has tried. It is a "dump of all the liabilities on a private-equity firm that is pretty savvy at analyzing the goods" move.

It could presage more deals. It is important to watch, because it may be the answer to a lot the problems out there for everyone from E*Trade (ETFC - commentary - Cramer's Take) to Washington Mutual (WM - commentary - Cramer's Take).

If I am right about this, CIT is not done rallying, because it was beginning to reflect a total default that has now been ruled out by this transaction. Congrats to CIT, which I had written off for dead when it was in the $20s. I would cover my short here.

Random musings: This Legg Mason (LM - commentary - Cramer's Take) issue is spilling into all of the asset gatherers. ... I wonder if all the negative news is now priced into Alcoa (AA - commentary - Cramer's Take) with this price cut from Credit Suisse.

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

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