Cramer's 'Mad Money' Recap: Sept. 8
09/08/08 - 07:43 PM EDT
Scott Rutt
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"The Treasury Department's plan to nationalize Fannie and Freddie is a game changer," Jim Cramer told viewers of his "Mad Money" TV show Monday. He said that a nationalized Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) is important to the markets and investors. Cramer said the action was important because the markets have been trapped in a viscous cycle, held in place by falling home prices. These falling prices, in turn, led to foreclosures, which led to more falling home prices. The news today, he emphasized, breaks that cycle, slowing foreclosures and finally allowing home prices to stabilize. Freddie and Fannie, said Cramer, account for almost 50% of all of the bad loans. With the government now in control of those loans, there will be many more options available for homeowners to avoid foreclosure. The end result will be lower mortgage rates for everyone, he said. Cramer said the double-digit decline in home prices since 2005 is finally coming to an end. He reiterated his prediction that a bottom in home prices is just 296 days away. Cramer said the time is now right to consider buying bank stocks. He reiterated buys on JPMorgan Chase (JPM Quote - Cramer on JPM - Stock Picks), a stock which he owns for his charitable trust Action Alerts PLUS, US Bancorp (USB Quote - Cramer on USB - Stock Picks), Wells Fargo (WFC Quote - Cramer on WFC - Stock Picks) and Bank of America (BAC Quote - Cramer on BAC - Stock Picks). He added Wachovia Bank (WB Quote - Cramer on WB - Stock Picks) to the list.
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