Cramer to Fed: Buy Fannie Mae Paper

Ron Hermance, Jon Corzine and Jim Cramer have more in common than their home state of New Jersey. All three said they think the Federal Reserve should buy some of Fannie Mae’s worst loans, the Mad Money host said.

Cramer, responding to comments made by Hudson City Bancorp CEO Ron Hermance and New Jersey Gov. Jon Corzine earlier in “Street Signs,” called on Ben Bernanke to buy $50 billion of Fannie Mae's bad paper in the housing market’s toughest markets – California, Florida, Ohio and other Midwestern states. Since the problem’s a regional one, Cramer said, stabilizing those areas would help housing on the whole.

Cramer and Gov. Corzine have something else in common: Both are former Goldman Sachs employees. Corzine’s the former chairman and CEO. Switching attention to his alma mater, Cramer that GS’s estimates are down “huge” while the prime brokerage business is benefiting from troubles at Bear Stearns. But that’s still not enough for him to recommend a brokerage stock, he said. “That’s taking your life in your hands.”

Jim's charitable trust owns Goldman Sachs.

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