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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
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
, a stock which he owns for his charitable trust
Action Alerts PLUS,
Bank of America
. He added
to the list.
Cramer: This Takeover's Biggest Winners
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He said all of these banks will benefit from their strong deposit bases going forward as the sector and the markets begin to recover.
The Three Stooges
Cramer returned to his "Wall of Shame" list of the worst CEOs to make a few changes. He removed
CEO Kerry Killinger, following his ouster this past weekend by the company's board of directors.
Cramer called Killinger a cataclysmic destroyer of value, noting that Washington Mutual's stock was at $24 a share when he added Killinger to the list on Nov. 5, 2007, down from $34 a share a year earlier. Today, with shares down 85%, Cramer acknowledged the board for finally doing the right thing.
Cramer quickly filled the vacancy on the "Wall of Shame" with what he called the "3 Stooges" in the analyst community: Bruce Harding of
, Marco Villegas of
JP Morgan Chase
and Bradley Ball of
. He said all of them had buy recommendations on Freddie Mac and Fannie Mae going into the takeover of the companies.
Cramer noted that of the 17 CEOs to have appeared on his Wall of Shame, 11 have since been fired or have resigned.
Cramer talked with New Jersey Gov. Jon Corzine about what the takeover of Freddie Mac and Fannie Mae means to the markets.
Corzine called the current mortgage crisis complicated, adding the takeover of Freddie and Fannie was necessary but very late to materialize. He said the Treasury Department's move will have lots of secondary implications as financial institutions de-leverage their portfolios.
Corzine said the two failed entities were entangled in many issues and that the regulators should have moved earlier on many of the problems. He called the practice of using deferred tax credits as capital simply "unbelievable."
Corzine was cautious though not to fault either CEO for the crisis. He said that a lot of lobbying happened in Washington to get the entities into this situation, and a lot of people are responsible for creating it.
Corzine said homeowners heard some good news today, but cautioned that home price relief may not be visible until possibly next spring or later.
Asked about the upcoming presidential election, Corzine said he felt the economy and housing prices would be a central issue in the upcoming presidential election. He said there are a lot of problems the middle class needs answers to and whoever has the answers will be elected.
In the Lightning Round, Cramer was bullish on
He was bearish on
United States Steel
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At the time of publication, Cramer was long JPMorgan Chase.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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