President Obama on Friday used a town-hall meeting in Elyria, Ohio, to push back against critics who claim government is getting too big on his watch. While Cramer said that “no one would ever confuse [Obama] with Ronald Reagan,” the Mad Money host did defend the president’s call for increased regulation in the financial-services industry.
“I don’t think there’s any sin to it,” Cramer said. “We had too little government” under President George W. Bush.
Cramer called Bush’s laissez-faire approach “a disaster” and blamed the previous administration for the credit crisis and the market’s worst declines since the Great Depression.
In fact, Cramer was surprised by Obama’s attempt to separate himself from the idea of big government.
“That’s kind of what a lot of us felt we needed,” Cramer said. “We just didn’t like this execution.”
And that’s where Cramer diverges from the president’s agenda, in its focus given the present environment. Cramer sees the merits in financial and health-care reform, as well as that in Obama’s cap-and-trade legislation to fight climate change, but he thinks the changes would be too detrimental to business in this time of market and economic volatility.
Specifically, in terms of bank regulation, Cramer has said he agrees with Rep. Barney Frank (D-Mass). Like Obama, the chairman of the House Financial Services Committee wants to limit the size and scope of these institutions’ activity, but on a much more gradual time scale. While Obama wants to crackdown immediately, Frank is calling for a three- to five-year process.
Cramer also tackled the possibility that Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke would leave the Obama administration. There has been speculation that Geithner in on the outs with the White House, and Bernanke’s reconfirmation doesn’t look to be guaranteed. Both men favor Barney Frank’s measured approach to regulation, and that may have put at least Geithner at odds with Obama. Bernanke meanwhile faces opposition from lawmakers on Capitol Hill, some of whom are unhappy with his performance and may vote against his serving another term.
If Geithner and Bernanke left their posts, Cramer said, that would be “a great reason to sell stocks, not to buy stocks.”
“Bernanke matters. Geithner matters,” Cramer said. “Let’s not kid ourselves.”
In stock news, the drop in nonperforming loans has pushed Huntington Bancshares and Webster Financial higher, Cramer noted. And among the auto-parts makers, he recommended Johnson Controls , which has benefited from a strong business in China.
“Johnson Controls is the real deal,” Cramer said.
Cramer's charitable trust owns Johnson Controls.
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