Jim Cramer's 'Stop Trading!': Buy Hudson City

Buy Hudson City Bancorp (HCBK Quote - Cramer on HCBK - Stock Picks), Jim Cramer said on CNBC's "Stop Trading!" segment Tuesday.

Cramer had previously given Hudson City CEO Ronald Hermance a "Mad Money" award for outstanding banking. "He was the only bank that was making money in the country," Cramer explained. He said Hudson City's banking practices stand in sharp contrast to those of National City (NCC Quote - Cramer on NCC - Stock Picks), which has had to raise $7 billion in equity thanks to the declining housing market. Hermance joined Cramer on "Stop Trading!" to explain his company's success.

Hermance said his bank has a record backlog in mortgage applications. Many borrowers, he said, are trying to refinance and couldn't go to other banks. He said that the "tremendous" mortgage applications are accompanied by "tremendous" deposit flow.

Cramer told Hermance he was "too humble." He said, "There's a lot of banks that dropped out of this business. They're afraid." He asked Hermance whether he believed that Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) will have to "take one for the team," and take on a number of bad loans.

Hermance said that housing prices should decline somewhat from current levels. He said that the most highly speculative cities in the U.S. are the ones that are hurting the most now and pointed to an employment problem in Michigan, Ohio and Indiana that is exacerbating the crisis.

Cramer said that Hudson City's improving margins make it a buy.