Cramer's 'Mad Money' Recap: FDIC Needs to Stop the Bank Runs
09/26/08 - 08:04 PM EDT
Scott Rutt
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While Congress is busy playing "Deal or No Deal" on Capitol Hill, Jim Cramer told the viewers of his "Mad Money" TV show Friday that there is a new problem looming on the horizon. Cramer explained that as fears lingers in the markets, large corporations and institutions are pulling their money out of bank money market funds, in favor of government backed Treasury bills. This move is slowly robbing banks of the capital reserves they so desperately need. Cramer called it "an invisible run on the banks," one that has no lines in the lobby but pushes banks to the breaking point nonetheless. Cramer called for the Federal Deposit Insurance Corporation (FDIC) to raise its account protection limit from $100,000 to as much as $2.5 million per account to rescue the banking system. "We are truly in dire straits here people," Cramer told viewers. He said the failure of Congress to pass the bailout plan is causing the banking system to fall deeper into trouble. The markets, he said, are completely out of control. Cramer said it's a national embarrassment that no senator or congressman is paying attention to what is happening. Only by stepping up FDIC deposit insurance limits, said Cramer, can confidence be partially restored and the exodus of capital slowed.
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