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Bricks-and-Mortars May Be the Ones to Bank On

Then again, an AOL bank or a Greenspan could throw a wrench in the works.

The hot buttons keep getting pushed around here. Now the B&M Bs are weighing in and saying, hold it, don't you go writing us off so fast.

Yes, the bricks-and-mortar banks are fighting back and flooding my email box with some pretty cogent arguments about why the



of the world won't Amazon the industry as easily as I think that they might.

First, unlike


(AMZN) - Get, Inc. Report

, which is offering a premium service for basically the same price as a bookseller at the mall, the pure online banks can't offer the premium service that banks provide customers: ATMs.

Second, the kind of business these online banks are generating, checking accounts, is not a great business, but is an expensive processing business. It only looks good right now because rates are rising, so the online folks can capture the differential.

"And if you are thinking about signing up for a NetBank account, ask them about unlimited, free ATM usage," one e-mailer writes. "Better yet, ask them about how to make deposits of grandma's Xmas checks, or the rebate check from


. On and on -- after a while, even the convenience, lower fees and higher rates' arguments wear a little thin."

The reader goes on to say that the banks themselves, now that they are through with the big Y2K spend, are moving aggressively to offer lots of terrific Web offerings.

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"If the major banks get their Web acts together," he concludes, "NetBank will be little more than a spitball against an aircraft carrier."

I like this combat. I think it makes sense and clarifies the threat that the Web may offer. Perhaps, however, there's another issue here that is larger than NetBank. What happens if






move aggressively into banking?

Isn't that the real worry? I don't mean to come up with new straw men that can explain the weakness in the bank stocks, but surely these stocks cannot be going down just on the yield curve and higher rates alone.

I guess my innermost fear is that it is not the Web that is knocking these bank stocks down; maybe it is a concern in the marketplace that


may have to take rates much, much higher, so high to where these banks will be paying out in passbooks at incredibly high levels and loaning at low rates. Maybe I just don't want to believe that is going to happen. After today's speech, though, maybe it will.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long AOL and Yahoo. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at