Credit Card Reform Will Clobber Bank Stocks

Could have cracked it; didn't. As I think about our president bashing the single best source of revenue that all of the financials have -- hidden fees! -- I marvel that we elected the polar opposite of the last president, a guy who genuinely thinks that regulation is good and that companies can't be predators.

As he ticked off all of the bizarre, fine-print ways the banks make money, from changing billing cycles to hiking rates to unconscionable levels to them forcing you to pay off the lowest rates first if you amalgamate bills, I found myself thinking that this president is putting out legislation that directly affects earnings per share. That's right, these fees are the high-margined, risk-free portion of the business, and if I were an analyst covering the banks and if there were any stability to bank earnings, I would be slashing numbers across the board.

This president fundamentally believes that while there should be personal responsibility involved, the banks have figured out hidden ways to make fortunes off the unfortunates, and this bill does put an end to it.

After so many years of a president who, I am sure, believed that if the poor are unhappy with credit cards they should tear them up, we've got a real breath of fresh air going.

Except that the air kills earnings, making Capital One Financial (COF - commentary - Trade Now) hard to own and not being so hot on most of the other banks either.

Random musings: Breathtaking moves continue in the ultimate weak-dollar plays, Coke (KO - commentary - Trade Now) and McDonald's (MCD - commentary - Trade Now). Remarkable rally signaling dollar going much lower.

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

---

Know What You Own: Major financial stocks include JPMorgan Chase (JPM - commentary - Trade Now), Citigroup (C - commentary - Trade Now), Wells Fargo (WFC - commentary - Trade Now), US Bancorp (USB - commentary - Trade Now), Bank of America (BAC - commentary - Trade Now), Deutsche Bank (DB - commentary - Trade Now), Morgan Stanley (MS - commentary - Trade Now) and Goldman Sachs (GS - commentary - Trade Now).

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.