Staking the Positive Ground on Banks

The bearish bets on the banks will not pay off, and not just because of the two-year auction that went so well. I am staking out the positive bank ground, and I think that you should buy them now, as I believe the end-of-quarter rally could be upon us, based on the money in -- there is plenty -- and the incredible negativity that will not let up.

What's the fundamental linchpin on this call (as opposed to just agreeing with Dougie)? Why? Why buy here, right now? Because the pace of deterioration is moderating. Which I regard with great comfort. There's something going on that's not in the numbers that makes me feel there could be some upside surprises: the deposit competition. It seems like it could be going away. Every time we get one of these moments where there is stress, there are banks that start paying ultra high interest for hot money to fund their books.

When I spoke to FDIC Chairman Sheila Bair about this on Mad Money, she said the FDIC is cracking down on these free riders of the system. That could produce spectacular "turn the lights on, make money" kinds of results. Sure, there isn't a lot of lending going on yet. I see it will come with the house-price stabilization that is becoming obvious even to the bears. We will then, as nonperformers start to peak, and deposit competition goes away, be able to build models for earnings. That's what's been lacking more than anything.

I see only one risk to my thesis: commercial real estate. If it is as bad as the bears say, then the residential mortgage bottom won't matter. But I have to tell you, this system has been under stress for an awfully long time, and we haven't seen much of any commercial real estate stress yet. I am wondering it if this won't turn out to be much ado about nothing.

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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.

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