Cramer: A Bottom For Fannie and Freddie

President George W. Bush changed his long-held view on Fannie Mae and Freddie Mac today and no one listened. That was what Cramer repeatedly pointed out on Friday’s Stop Trading! segment, amid breaking news that the Federal Reserve has told both GSEs that they are eligible to take advantage of the emergency discount window.

Bush, who has been a “hands off, laissez-faire” president in terms of the financial markets, abruptly changed his tune on Fannie and Freddie in a news conference earlier in the day by sending a message of hope that these institutions must be preserved, but that they don't need more capital.

“These stocks should no longer be going down,” Cramer said.

The Mad Money host urged viewers and investors to “parse [the President’s] words” in order to see the magnitude of his change in position. The ability of Fannie and Freddie to access the discount window is not nearly as important to the stocks, or the broader market, as the fact that the President of the United States has implicitly said that he will not allow these companies to fail.

The Bush administration had long been the enemy of GSEs like Fannie and Freddie, the embodiment of Democratic big-government policies – until just now. Because the President has changed his outlook, insolvency should no longer be a threat to either company, and the run on the equity should stop.

“The President changed everything today,” Cramer said.

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