Cramer: Housing Bill to Move Builders, Banks

The housing bill is a huge deal. I don't think people realize how big. Besides saving Fannie(FNM Quote) and Freddie(FRE Quote) through the big losses -- perhaps to the Promised Land where there will be stronger fees overwhelming charge-offs sometime in 2010? -- it will help eliminate the overhang of foreclosed homes.

That's bullish for my two faves in a hated industry: KB Home(KBH Quote) and Toll Brothers(TOL Quote), the two best houses in a real crummy neighborhood. (I like Ryland(RYL Quote) too on this bill.)

But more important, the question, the bigger question, is, how much is in the bank stocks for this bill? We all know there has to be a price, a time, where these stocks are overinflated. We obviously aren't there yet, in part because even the worst of the banks, Washington Mutual(WM Quote), is passing muster today.

The move in the four fortresses, Bank of America(BAC Quote), JPMorgan Chase(JPM Quote), U.S. Bancorp(USB Quote) and Wells Fargo(WFC Quote), seems so overdone that I have to expect profit-taking -- maybe we will get it on any strength in oil -- but the money keeps flowing in to it.

Some of this move is the short-sell rules, some of it is the better-than-expected net interest margins coupled with the overwhelming charge-offs that in some cases, like Wachovia(WB Quote), feel kitchen-sinkish (at last because Sarbanes Oxley has forbidden those, but it looks like the government is at last allowing some forbearance on the Sarbanes front), some of it is housing bill, some of it is the incredible climbing fees and deposit bases, and some of it is historic cheapness-valuation.