FDIC Should Boost Guarantees

A new problem that needs to be solved: We need to have the Federal Deposit Insurance Corporation up its limits right now, perhaps to as high as $500,000 with additional protection available for some cost. We need to have corporate and trust accounts of multiple millions to be able to get insurance from the FDIC.

We need it because right now throughout the country we are seeing CFOs, lawyers, wealthy people pulling their money out of savings accounts and asking for T-bills. This is killing lending and it has to do with how long we have dragged this out and how bad it has become. The lack of confidence inspired by the Lehman demise and the general poor health of many banks is going to make this into an intractable moment if someone doesn't start pushing this.

Everyone knows this is going on but I don't hear a word being done about it.

The FDIC should be calling for this now because the big banks all know it is happening.

Either that, or every dime is going to go to JPMorgan (JPM Quote), which is now being described as the ONLY bank that anyone is willing to put money in.

Random musings: I am seeing some stocks being hit by what looks like redemptions from hedge funds. Ones I am watching -- Freeport (FCX Quote), NYSE Euronext (NYX Quote) and MasterCard (MA Quote), as well as all the nat gas plays. ... Guest columnist Michael Kao outlined some fixes we should implement to get us through this crisis, including increasing FDIC protection. Good stuff.

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