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Cramer Changes Course: Have Faith in Geithner

It's cheaper than nationalization, and gets banks moving again

By Clay Dillow,  Newser Staff

Posted Feb 13, 2009 9:46 AM CST
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(Newser) – Geithner’s got it, James Cramer writes in New York—much to his own surprise. Cramer notes that he's railed against the Treasury chief for months, but he's now come around just as others have abandoned him. “The press, the pols, the Wall Streeters—they are all dumping their golden boy just when he’s figured out how to solve the most intractable set of financial woes since the ones that landed on FDR’s desk 76 years ago.”

Banks need recapitalization, and they need to take bad assets off their books. And some banks just need to fail. Geithner’s plan blends all three ideas: He’ll determine which banks are worth saving, inject money into the good ones, and offer financing that encourages private investors to buy up bad assets. The plan is cheaper to taxpayers than nationalization and lets the private sector take on the burden. Let's just hope Geithner can survive the political storm long enough to get it enacted.

Treasury Secretary Tim Geithner testifies on Capitol Hill in Washington, Wednesday, Feb. 11, 2009, before the Senate Budget Committee.
Treasury Secretary Tim Geithner testifies on Capitol Hill in Washington, Wednesday, Feb. 11, 2009, before the Senate Budget Committee.   (AP Photo/Susan Walsh)
Treasury Secretary Tim Geithner testifies on Capitol Hill in Washington, Tuesday, Feb. 10, 2009, before the Senate Banking Committee.
Treasury Secretary Tim Geithner testifies on Capitol Hill in Washington, Tuesday, Feb. 10, 2009, before the Senate Banking Committee.   (AP Photo/Susan Walsh)
Jim Cramer says Tim Geithner's plan is smart.
Jim Cramer says Tim Geithner's plan is smart.   (AP Photo/Peter Kramer, file)
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I hope that Geithner’s still got enough Teflon to see him through this brutal moment. If he does, he could wind up worthy of the Hamilton-Morgan mantle. If not, there’s a whole lot more pain in store before we’re in the clear. - James Cramer, New York

I know others see nationalization as an inevitability. I see it as a catastrophe.
- James Cramer, New York

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COMMENTS
Showing 3 of 7 comments
Guest
Feb 14, 2009 1:10 AM CST
"Hopefully it won't take 6 years." Don't you folks read? The hybrid program will nationalize the banks that don't pass a solvency test. I'm really relieved that New York Magazine's James J. Cramer has seen the wisdom of the nuanced approach the President and his folks have come up with, and that this suitably notable spokesperson 'gets it'. There's an interesting dimension about 'getting it' with the sea-change that's unfolding in the US. Those who 'get it' are in charge - both politicos and the extremely active populace, alike. Those who don't get it are the lemming-heads in Ditto-land - in fact, the first thing they need to get, is that, yes, they (Limbaugh Insurgents) are as repulsive as the rest of the country is considering them. So, they immediately band together to show off their 'Group Dumb' by fastidiously abjuring the Next Great Wave. Actually, the hopeful SteveK9 exemplifies this in his willful mis-reading of what's right on the monitor before him printed out in English. It's sad to see people act like such sheep, who find comfort in being a part of the great masses of sheep who comprise the hateful followers of Mr. I Hope The President Of The United States Of America FAILS Limbaugh, aka Dangerously Treasonous Demagogue.
Guest
Feb 13, 2009 9:31 PM CST
There is a column in the NYTimes today that compares what Geithner is proposing with the Japanese approach after their real-estate bubble burst. After 6 years nothing was fixed. They finally went into the banks, made them declare their losses, and nationalized one of the major banks. The bankers screamed bloody murder but by then the politicians had had enough. Hopefully it won't take 6 years.
Doctor-Zaius
Feb 13, 2009 7:47 PM CST
Actually the stock market plunged because Wall St. doesn't think the Jobs bill is large enough.

Geithner to suggest bold action to G-7
Reuters

The stimulus could have done more: New York Times
New York Times

Wall Street finds some good in Geithner plan
CNN

 
nationalization • Jim Cramer • mortgage backed securities • taxpayer money • financial crisis • recapitalization • Timothy Geithner

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