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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.

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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) - Get Report

or

Citigroup

(C) - Get Report

. We are not going to nationalize

Wells Fargo

(WFC) - Get Report

. 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) - Get Report

, 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) - Get Report

,

Comerica

(CMA) - Get Report

,

SunTrust

(STI) - Get Report

,

Huntington Bancshares

(HBAN) - Get Report

,

Regions Financial

(RF) - Get Report

and

Fifth Third

(FITB) - Get Report

. Maybe they will be turned into zombie banks. Maybe they get seized.

But hitting a home run by shorting Bank of America or Citigroup from here may be difficult to get.

In the meantime,

Goldman Sachs

(GS) - Get Report

does not need the government and can very quickly do an equity offering right here to pay back a lot of it. (Remember, you can't earn out of TARP; you have to raise equity to do so, a rule that the congresspeople grilling Lloyd Blankfein didn't seem to know.) That stock will go up despite

UltraShort Financials ProShares

(SKF) - Get Report

bashing, which shows it would be even much higher, as it is a huge part of the index. By the way, I had people in the so-called Goldman emergency meeting, and it was regularly skedded. I wish it

weren't

, because the new stress-test plan allows Goldman to go buy pretty much everyone.

So, the misinterpretations of the stress test continue. You must understand that the government wants the Citis and the Bank of Americas to work out their situations themselves. They have no desire to seize or run these banks.

Wells Fargo? They want this one to work. They know it was a survivor before it stupidly bought Wachovia. They will help it by giving it the deposits of ne'er-do-well banks, not strip it of its strength. They need more banks than just Goldman,

Morgan Stanley

(MS) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

.

So, the endless attempts to break common stocks seems, at this point, to be misplaced, because all you are really breaking with the UltraShort Financials is Wells Fargo, and maybe

PNC

(PNC) - Get Report

. That's really about it.

Maybe time to pick another instrument?

At the time of publication, Cramer was long Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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