Here’s something else Cramer was right about: the need for Washington Mutual to get rid of CEO Kerry Killinger.
Luckily for shareholders, Mr. Killinger, who Cramer described as “perhaps the greatest destroyer of value since Ghengis Khan,” got the boot over the weekend.
This is a man whose stock dropped 82%, to $4.12 from $24, just in the time since Cramer added Killinger to the Wall of Shame (Nov. 5, 2007). In 2007, the stock plummeted 70%. Of course, that didn’t stop the CEO from collecting $5.2 million in total compensation that year, though.
Now that he’s gone, there’s no longer a reason to publicly vilify Killinger. That means there’s space on the Wall for some new members. And Cramer had Three Stooges in particular he wanted to induct: Bruce Harting of Lehman Brothers (Larry), Marco Villegas of JPMorgan Chase (Curly) and Bradley Ball of Citigroup (Moe). All of them had buy calls on Fannie Mae and Freddie Mac.
Here’s what Moe from Citigroup had to say: “We expect shareholders’ interest to be preserved. The GSEs should continue to be most effective in their current [shareholder-owned] form.” Today, Moe downgraded both stocks to sell.
Larry and Lehman: “Capital Reserves Better Than Perceptions,” he wrote. Yeah, right.
Curly at JPMorgan labeled both Fannie and Freddie “overweight,” meaning buy, back on May 22. Even after the weekend’s big events, Curly still hasn’t made a sound.
Now Cramer’s not saying that there isn’t a play on Fannie and Freddie at these levels. At least not if you believe, as he does, that housing will bottom in the third quarter of 2009. But the bottom line here is that all three of these guys thought the stocks were buys when they were anything but.
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