A Simple Solution

Let's get one thing straight: The banks can't afford to lend. They don't have enough equity. They are borrowing money from TARP, not getting money and as the excellent piece on Synovus (SNV - commentary - Cramer's Take) shows today, it isn't going to change.

I have a number of off-the-record contacts at major banks. They say over and over again, "There is no funding." Oddly, there is a solution out there for the Citigroups (C - commentary - Cramer's Take) and the JPMorgans (JPM - commentary - Cramer's Take) and the Bank of Americas (BAC - commentary - Cramer's Take): corporate money that is stuck in Treasuries and getting nothing.

It is time for Sheila Bair to step up to the plate and deal with the Synovus problem. It is a simple solution, one that many of the major bank CEOs I deal with endorse: jumbo CDs for corporations. You simply allow the banks to pay 2.5% on two-year CDs, limit $2.5 million, guaranteed by the FDIC, where 0.25% is kicked back by the banks for FDIC insurance on the program. The banks borrow low, the treasurers get to put some money in better, higher-yielding instruments, and the money flows again.

Why aren't they doing this? No creativity. A year ago I suggested to Ben Bernanke that he start buying mortgage paper in huge quantities to get mortgage rates down. My suggestion was greeted with laughter about what a pessimist I was and how that might not be allowed by Congress. Of course, they are doing it like mad now, no congressional approval.

My plan gets the job done tomorrow. You simply allow all of the banks that took the TARP money -- and therefore are certified -- to offer these jumbo CDs. You can make them bigger if you want, but I like the limit and therefore the spread-around from Synovus to Citi.

I know that because I proposed this, I will be ridiculed. Maybe if someone from a major bank who is reading this -- Vikram Pandit? Lloyd Blankfein? -- says something, we can get it done. Now that we know the terrific Sheila Bair is staying on, the strategy -- and therefore the funding -- can be put in place tomorrow.

Random musings: I repeat that the faith in tech is misplaced. I hate Dell (DELL - commentary - Cramer's Take). I think the disk drives are shorts. The "seven under $7" stocks I recommended at the TheStreet.com conference in October -- video available -- should be sold.

At the time of publication, Cramer was long JPMorgan.

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