'Bailout' Critics, Shut Up and Get Long

Those who oppose the president's plan on the basis of contracts or being help to deadbeats or because it bails out the banks are continuing to raise their voices.

They should shut up and get long.

Let's drill down to a couple of ugly banks, BankUnited (BKUNA - commentary - Cramer's Take) and Downey Savings (DSL - commentary - Cramer's Take). Both of these have made the kinds of mortgages that are looking like sure defaults.

The bank examiners could crush both of them. I mean, BankUnited has issued a huge amount of negative amortization loans, where the interest gets tacked on huge later on. It is pretty darned obvious that loans like these aren't going to be paid back.

If you are a bank examiner and you look at these loans or at the loans that Downey has made, similarly, you have to say, "Look guys, I can't allow this. In fact, I think that you guys have to raise some capital and you will have to put yourself up for sale at what will be a discount -- think E*Trade (ETFC - commentary - Cramer's Take)."

That would be devastating, just devastating. It could close them.

Now, though, the banks can say, "Go talk to Paulson. We are golden. These loans are all frozen. Nobody's defaulting. We are in great shape."

Who can disagree?

Is that a bailout? I don't even know what you would call it. But I would say that if you were short BankUnited or Downey, you have less of a case after this plan than before.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider BankUnited to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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

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