Cramer: Shorts Can't Break the Big Banks

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Every day they play break the bank. They play it because Tim Geithner gave them ammo. But I think they have a lot of assumptions wrong.

What they are banking on is the "stress test," meaning that if they can break the stocks, they can break the banks, and that means that the banks that go down will not pass the stress test.

If you don't pass the stress test, I think you get shut down, and your assets will be given to the "good" banks. Here's the issue that the shorts don't realize: While many of the banks that are going down should go down, because they will not meet the stress test, there are others that will meet it simply because the government is not about to seize them.

We are not going to nationalize Bank of America(BAC) or Citigroup(C). We are not going to nationalize Wells Fargo(WFC). We are not going to seize them. We are going to let them build capital and work them out themselves. We are going to do that because it is nuts to seize them, and Tim Geithner knows that. He knows that the government doesn't have a clue about how to run Citigroup(C), for example, with all of those myriad special-purpose vehicles that are like giant collateralized debt obligations.

There's lots of talk about how Sweden nationalized its banks and it worked, and how that means we could do the same thing. That's just silly. Citigroup's structured investment vehicles are bigger than the entire market of Sweden. The degree of difficulty of our problems vs. the simple commercial and residential mortgages of Sweden make the analogy just plain stupid.

I believe in selling a lot of the smaller regionals. I don't know what happens to KeyCorp(KEY), Comerica(CMA), SunTrust(STI), Huntington Bancshares(HBAN), Regions Financial(RF) and Fifth Third(FITB). Maybe they will be turned into zombie banks. Maybe they get seized.