It’s no coincidence that the declines in Morgan Stanley , JPMorgan Chase, Wachovia and Bank of America came immediately after the Securities and Exchange Commission eased up on its prohibition against naked short selling some of America’s most important financials. At least that’s how Cramer sees it.
He’s railed against this many, many times before. But Wednesday he just wanted to reiterate how important that enforcement is. After all, it’s the very reason Merrill Lynch and Lehman Brothers were able to finally find their footing. Without SEC intervention, bear raid upon bear raid would have continued to drive these stocks into oblivion.
Look at just a couple of the banks that weren’t on the SEC’s protection list: Both American International Group and Downey Financial are struggling right now.
Cramer wants to see a Resolution Mortgage Trust set up to take on the bad loans weighing so heavily on this sector. That way other healthier banks can swoop in and buy the good parts of what’s left of these struggling banks.
But the SEC’s laissez faire approach to market regulation is making any kind of recovery in this sector that much harder to accomplish.
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