Bank Mess Gives a Break to Wells Fargo

A plan is developing totally away from the feds, the tiering of good banks and bad banks. And there are good banks, banks that could have national ambitions, that are now going to get their chance to act. Right here.

If the Treasury acts quickly and sets up a good-bank/bad-bank scenario, we can see what can happen. If the Treasury sets up that Mortgage Resolution Trust, it can quickly sell all of the not-too-big-to-fail banks -- National City (NCC - commentary - Cramer's Take), Regions (RF - commentary - Cramer's Take), First Horizon (FHN - commentary - Cramer's Take) (believe me it needs it), Huntington Bancshares (HBAN - commentary - Cramer's Take), KeyCorp (KEY - commentary - Cramer's Take), Washington Mutual (WM - commentary - Cramer's Take) (yes! Fifth) and all the other single-digit players -- to Wells Fargo (WFC - commentary - Cramer's Take) and then put the bad loans in a trust that can work itself out because the bad loans are only from 2005-07. Wells Fargo can do it because the banks are all where it needs branches to take over the country.

How about Wachovia (WB - commentary - Cramer's Take)? We will see that split into good and bad and sell off its own loans into the bad bank and raise capital.

Bank of America (BAC - commentary - Cramer's Take)? It will declare its dividend this week and I suspect it can rally, so it can issue more equity. It, too, is able to separate its bad loans, mostly from Countrywide, to the Mortgage Resolution Trust, a la what I expect from Wachovia.

That leaves only Citigroup (C - commentary - Cramer's Take) which must go to Saudi Arabia to solve its problems. No choice.

But we have the front half -- the surviving bank, Wells Fargo. Now the bank half has to be delivered.

We need both, but it just got a lot easier, even without the SEC's "new" short-selling rules. We are getting some hope right here, right now and it is most welcome.

Random Musings:

• Great call by Doug Kass to pick up some Lehman (LEH - commentary - Cramer's Take) yesterday. You have to stay close to his trades here.
• You know I think natural gas is way overdone. Does anyone think that Freeport-McMoRan (FCX - commentary - Cramer's Take) will really be independent if it keeps coming down?
• Last time Chicago Bridge & Iron (CBI - commentary - Cramer's Take) screwed up all of the infrastructure stocks, it came down and it was a great opportunity. I believe this will happen again. CBI is all about domestic infra, which relies on muni bonds which have been crushed and are virtually not issuable right now.
• BP (BP - commentary - Cramer's Take) becomes the highest-yielding major oil, that's so darned cheap. ConocoPhillips (COP - commentary - Cramer's Take) is cheap too. These companies will simply buy every share if you don't here.
• Northern Trust (NTRS - commentary - Cramer's Take) joins State Street (STT - commentary - Cramer's Take) as positive influence in banks. But they are custodians, more like Schwab (SCHW - commentary - Cramer's Take).

At the time of publication, Cramer was long Freeport-McMoRan.

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