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Cramer's 'Mad Money' Recap: Grilling Wells

Scott Rutt

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"There is no leadership in this market," Jim Cramer told viewers on a special, midday episode of his "Mad Money" TV show Tuesday.

He said the markets are stuck in "no man's land," with many traders on vacation and not much news driving the action.

Despite the late summer lull, Cramer said there is still money to be made if investors have a little cash, stay diversified and use a little ingenuity.

He talked with John Stumpf, president and CEO of Wells Fargo (WFC Quote), about some of the recent moves by the bank.

Of particular interest was Well's decision to raise its annual dividend from 31 cents a share to 34 cents a share during what has notably been one of the worse times in recent history for the banking and financial sector.

Stumpf defended the decision, stating that the dividend boost was not done for show, but was based on the company's fundamentals and earnings. Despite stress in the industry, Wells Fargo has stayed strong because of its assets, liquidity and balance sheet, he said.

When asked about a possible government takeover of Freddie Mac (FRE Quote) and Fannie Mae (FNM Quote), Stumpf said that a takeover would be good for housing and the economy, but would have little impact on the operations of Wells Fargo.

With regards to the company's balance sheet and earnings report, Stumpf defended the bank's decision to extend the change the amount of time to charge off bad home loans to 180 days from 120 days. He said it was not done to prop up earnings but to give customers more time to negotiate their loans and avoid foreclosure.

Stumpf cited the company's recent $3 billion writedown, half of which was used to charge off loans and half of which was used to bolster reserves, as proof positive that the company is being candid about its bad loan exposure.

He acknowledged an increase in "Level 3" debt at the bank but he said it should be taken in perspective, noting it only represents 5.5% of the bank's assets.

The High-End Market

Is the high-end American consumer really tapped out? Cramer put that question to Jonathan Tisch, chairman and CEO of Loews Corp (L Quote).

Despite rumors to the contrary, Tisch said Loews' earnings are still up 2% to 3% from last year. He said that New York remains a strong market for the company, helped in part by a weakening dollar that is attracting overseas tourists.

In other areas of the country, the picture is not as rosy. According to Tisch, Hawaii is a "disaster," as the state is suffering from airlines cutting back on their total number of seats. He said Las Vegas is also in the same boat, suffering from too many rooms and lower gambling revenue overall.

Despite the patchy signs of weakness, Tisch said Loews is looking to expand its footprint. He said that competition for choice properties and hotels remains stiff due to increased demand from international investors.

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