Cramer: Fix Banks, Don't Nationalize Them

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Somehow the gravity of this spiraling banking situation is not getting through to the policymakers, particularly Timothy Geithner, the Treasury Secretary. So in the interests of advancing the debate we need to consider how the government could get in control of the banking system without actually taking control of the banking companies.

Right now the short-sellers, those who want the banking system to fail, are destroying the common stocks of the banks through relentless short selling. On many recent days, roughly half of the overall selling of major banks' shares has consisted of common short sales plus the short sales that spring from the UltraShort Financials ProShares(SKF Quote), the weapon of choice for magnifying a small amount of capital to wreck short-side havoc on the stocks. These sales are legal, having been sanctioned by a Securities and Exchange Commission that has, unwittingly, been in league with those who need to destroy the banks in order to profit from the common stocks' demise.

The rest of the debate is being controlled by those calling for the nationalization of the banking system. Did you know that not a single person proposing the nationalization system has ever offered a reason why it would solve our problems? They keep quoting how nationalization "worked" in Sweden, but those were just a couple of small banks by U.S. standards and mean very little or are actually irrelevant to the situation.

Right now the marketplace and the doomsayers, many of whom may actually be profiting from their dire forecasts, are in charge of the situation. The U.S. government needs to regain control not of the banks, but of the system of banks, and needs to do it now.