Cramer during Monday’s Stop Trading! scolded Washington for mishandling its stake in Citigroup. The government, which owns 34% of the bank, let slip a sizable profit when Citi shares fetched $5, apparently hoping the market would push higher and generate an even better return. But that didn’t happen.
“The government was greedy,” Cramer said, “and now everybody’s suffered.”
Citigroup is hoping to payback Trouble Asset Relief Program funding by holding a stock offering. Cramer had expected the government to unload its stake in the bank first, but now sees trouble for Citi if Washington has yet to do so.
The profits made from saving Citigroup would have been “the biggest boost for TARP ever,” Cramer said, but instead the government “played the market.”
“And we would like some explanation for that, frankly, as taxpayers,” he said.
Cramer also commented on New York Community Bancorp’s purchase of the shuttered AmTrust Bank, which was facilitated by the Federal Deposit Insurance Co., saying he didn’t think the former was “operating well enough to get the FDIC’s nod.” He thought AmTrust would go to First Niagara Financial .
Cramer called the transaction a “so-so deal,” pointing also to the 60-million share offering New York Community has planned to raise capital. That will result in a “gigantic amount of dilution,” Cramer said. He recommended that investors buy FNFG instead.
It’s “another good opportunity to buy a bank that’s been creeping up from $11 to $13,” Cramer said, “in a period when banks have been horrible.”
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