Buffett's Bullishness Is an All Clear on Banks

Where is Nouriel Roubini to criticize Warren Buffett? Where is Paul Krugman? Here we have the foremost investor of our lifetime saying that the stress tests are unnecessary for 15 out of the 19 banks out there. He then says that Wells Fargo (WFC - commentary - Cramer's Take), U.S. Bancorp (USB - commentary - Cramer's Take) and M&T Bank (MTB - commentary - Cramer's Take) are all fine.

Put aside M&T -- two of the banks the Roubini/Krugman mob have to think are insolvent are WFC and USB, as both swallowed other bad banks -- Wells bought Wachovia and U.S. Bancorp bought Downey -- and now both have Buffett's blessing. The others don't matter under Buffett's regime given that they are so small they can be bought by the FDIC. We know that Goldman's (GS - commentary - Cramer's Take) not a problem, they could pay back the TARP money tomorrow.

So what does that leave? Just two banks: Bank of America (BAC - commentary - Cramer's Take) and Citigroup (C - commentary - Cramer's Take). These are the two that are the real issues, and to me these can survive through forbearance, even as zombie-style institutions. Bank of America's denial of the need to raise money, by the way, seems hard to believe, but then again, they are making a ton of money just being in business, too.

Between the Treasury and Buffett, I trust Buffett. Among Treasury, Buffett and the professor/columnist cabal, I most definitely prefer Buffett.

The defense of USB and certainly WFC by Buffett has to do with the huge amount of money they make every day when they turn the lights on. Buffett has a ton of businesses related to housing, so presumably he has a handle on the mortgage side of things. He also knows the yield curve, particularly the two-to-10 spread, which is also fantastic.

To me, if there are only two meaningful banks that will fail the stress test, Citi and Bank of America, according to an extrapolation of Buffett's words, we are home free, no matter what the Treasury says.

I think this means the stress test issue, public or private, is now behind us.

Let's move on.

Go buy some technology. More to come on that issue.

Random musings: If you want to monitor the progress of the banks ahead of where they trade, take a look at Royal Bank of Scotland (RBS - commentary - Cramer's Take) in Europe, which is red-hot. ... Apple (AAPL - commentary - Cramer's Take) is on fire without news. Always exciting. ... This upgrade of Intel (INTC - commentary - Cramer's Take) by Morgan Stanley is gigantic and will keep the tech ball rolling.

At the time of publication, Cramer was long Wells Fargo and Goldman Sachs.

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