Capital One bought three banks – Northfork, Greenpoint and another in Louisiana that hasn't recovered from Hurricane Katrina – and none of them can be doing well in the current environment. Even the company's credit-card business, normally a high-margin one, is starting to see more and more defaults.
Unfortunately, Capital One spent all the capital it needs right now buying back stock at a much higher level. And with no yield support and what Cramer said he thinks is a series of bad numbers on the way, it's time to sell COF. The stock dipped $3, to $45 from $48, Thursday after a downgrade, but it battled back above its starting point later in the day. Homegamers should use this opportunity to get out, Cramer said.
As for AIG , there was hope for the stock when former CEO Hank Greenberg stopped selling chunks of his 10% stake in the company. He was trying to get AIG to realize the value of its assets, which include life insurance, reinsurance, airplane leasing and more, Cramer said.
But New York State Insurance Commissioner Eric Dinallo stepped in, saying Greenberg, even though he was ousted as part of Eliot Spitzer's investigation into insurance price-fixing, is still too much of an insider to be agitating for change. Now, there's a good chance Greenberg could become a seller again, destroying the stock the way he was before.
So again, without yield support or any visible capital structure, and since AIG is too big to be bought out, this stock is a sell, too, Cramer said.
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