A Vote of Confidence for the Recovery Plan

Everybody hates the stress test/TARP/public-private solution for banks, and that tells me that Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke are going about things just right. And the stock market is showing you today, despite the 6% decline in GDP, that we could have a compromise that is a home run when it comes to these 19 institutions in question.

Today a columnist in The New York Times' business section talks about how the central debate remains whether the government shouldn't be nationalizing the banks. That's the leftist, "government can do a better job, enough is enough" position that actually believes the feds would do a better job than, say, Vikram Pandit at Citigroup (C - commentary - Cramer's Take). While there is no doubt that there are bankers who could be superior to Pandit, who, by the way, did not build the ridiculous edifice that is Citigroup, I see no reason why the taxpayer should have to shoulder Citigroup, which is what happens if you nationalize. It's the worst of both worlds: a poorly run U.S.-owned bank!

At least with the current plan there is a chance, albeit slim, that we will get some money back when things get better, and judging by the tenor of the economy, it is a "when," not if. Don't underestimate the power of that, because most of the problems with Citigroup could go away with a stronger economy.

Sure, the government could break up Citigroup, and I think it really is doing that behind the scenes, or at least pressuring it, but that kind of intervention even for the "worst" bank, seems like a huge mistake and something that should now be put in the past, given the robust nature of the first quarter. Of course the pundits say the quarter is all a lie, but that's because they don't understand that there is forbearance at work which will always make the numbers look good.

ALL JIM CRAMER BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon.com purchases by customers directed there from TheStreet.com.