The Leaders Aren't Up to the Challenge

Without a bear story to cling to and with oil going down, you see how benign and positive this market really can be. You can see how people are going back to the "happier days are here again" scenario. Now, will the ne'er-do-well financial institutions use the benign moments to raise more equity?

I think we have to start imagining a world where somehow Washington Mutual (WM) and Citigroup raise money. We have to be thinking that AIG (AIG) is working on an offering. That's what happens when we get a couple of good days with a decent bond market and no crises.

I think the problem with the remaining eyesores is the leadership. AIG's boss, Robert Willumstad, still has not gotten his arms around the European exposure, and the downturn there in real estate is where we were in about December 2007. Not a good place to be.

Citigroup has become a debating society with endless trimmings. But let's face it, if any of these headcount reductions had been real, they would have about two-thirds the employees they had last year at this time. I wonder whether Pandit is an inept fund-raiser and whether it's time to admit that they need him in some sort of office of the chairman. Citigroup is in the same shape as a college that needs to put in a president who is a fund-raiser, not a practitioner, and Pandit's clearly not cut out for that. Not inept; just the wrong man for the job. Lehman's (LEH) Dick Fuld is now squarely part of the problem. He has lost the truth and faith of the investment community. If Kerry Killinger were to be fired, WaMu would go to $5-7 and it could raise money.

Fannie (FNM) and Freddie (FRE)? Up to Treasury. I reiterate, was the Barron's thing a big hoax? A gift to the shorts? I am sure we will never know.

Without the leadership of a ruthless guy like John Thain, we are going to be stuck with these walking dead on our screen for some time, perhaps until next year, when I believe housing will bottom. But with new leaders, we can get something like what happened to Wachovia (WB): faith. Faith that there is a way out with Bob Steel. Notice how that stock doesn't give up much of its gains anymore and seems positioned to be a big winner when housing clears up.

In the end, management matters. The remaining companies on the critical list don't have the management for crisis and fund-raising.

So they are doomed to plague us next time the market has a downturn, and we know that will have to happen.

Random musings: The hurricane trade is such a sucker's bet, it is frightening to think about it. You own these stocks because of low P/Es and high growth, and nothing else, as oil is rangebound. ... Tony Crescenzi has a great piece on another market that is clearing up, commercial paper. Check it out, it's terrific.

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

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