Cramer Rages on Banks: 'Where's the SEC?!'

Why isn't the Securities and Exchange Commission getting more involved in the whole banking sector writedown situation? Especially since the numbers are likely to get worse, not better? That's what Jim Cramer, CNBC's resident stock guru, wants to know.

"It's all fiction!" he declared during a forceful exchange (see it in full in the accompanying video) on CNBC's "Squawk Box."

"How can we have these levels of fiction in financials after Sarbanes-Oxley? How do people get away with this? How do they live with themselves?"

Cramer made his comments while reviewing results from Merrill. But his real consternation surrounded the insurers who cover banking investments. Some of those insurers haven't come clean about their liabilities, Cramer speculated. Eventually they will, and then the "fiction" will disappear, he said.

The banking sector and its related industries are all too chummy, Cramer accused. That led the numbers related to mortgage investments -- investments that are currently souring -- to break from reality.

"I think the financial guys all belong to the same club and they got to protect each other," he said.

Worse, those executives behind the current credit crunch are unlikely to get any punishment for their mistakes and disingenuousness about their numbers, Cramer opined.

"I'm fed up with it. The American people should be fed up with it. And the SEC should be fed up with it," Cramer said.

"This is what the SEC is supposed to protect us from," he added.

Earlier on Thursday Merrill reported a net loss of $9.8 billion in the fourth quarter, or $12.01 a share, down from earnings of $2.3 billion, or $2.41 a share in the year-ago period.

On an operating basis the company lost $12.57 a share, with analysts predicting a loss, on average, of $4.93 a share.

The company wrote down $11.5 billion related to subprime mortgages in the quarter, and $2.6 billion related to hedges related to financial guarantors on collateralized debt obligations. (Read about Merrill's Earnings here).

"I always counted on Merrill Lynch to have really honest financials and it just wasn't the case," Cramer lamented.

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