As authored by Democratic Senator Blanche Lincoln of Arkansas, financial regulatory reform would hurt US banking institutions because it would prevent them from offering the full range of services that foreign banks can provide, Cramer said on Monday’s Stop Trading!.
Cramer believes Lincoln’s legislation, which limits over-the-counter derivatives and interest-rate swaps, would hurt American financial institutions. In turn, foreign banks located in the US would profit. According to Cramer, a client who would otherwise do business with US banks might opt for a foreign institution because they offer more choices, and so the reform could be a “killer.”
In New York, Cramer said, a JPMorgan Chase customer could literally take their money across the street to German-based Deutsche Bank .
“This is the ultimate ‘Bailout of the German bank bill’ because there’s no way you would work with some of these banks if you can’t have interest-rate swaps,” Cramer said, recommending Deutsche Bank right now. “Corporate finance executives want to be able to offer interest-rate swaps to protect foreign-exchange swaps, and Blanche Lincoln wants to take that away."
If financial regulation were to pass, Cramer said, American banks would only deal in CDs and “little mortgages.”
Elsewhere in the market, Cramer again recommended Nordic American Tanker for its dividend yield.
With General Motors reporting a first quarter profit today, which creditors should be paid back first: the unions or the taxpayers? Watch the video to find out what Cramer had to say.
Cramer’s charitable trust owns JPMorgan Chase.
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