Despite Steel, Bank CEOs Can't Be Trusted

Were we wrong to put Bob Steel on the Wall of Shame this Monday, when Wachovia looked like it would be taken over by Citigroup in an FDIC-supported deal that might have wiped out Wachovia's shareholders?

On tonight's show, Jim apologized to Steel and took him off the Wall because of the new deal with Wells Fargo valuing Wachovia at $7 a share. He said he was wrong not to trust Steel. We'd put him on the Wall of Shame because in an interview with Jim two weeks before Steel had said Wachovia had only $10 billion in bad loans, but when the Citigroup acquisition was announced it turned out there were $42 billion in bad loans.

Now, if you'd bought Wachovia on Monday, you could've paid less than $2 for the stock. If you'd bought it on Tuesday, you could've paid less than $3 for something that's now going to $7, and perhaps higher if the bidding war Jim predicted on tonight's show happens. So
objectively, not trusting Steel was the wrong move because it was a missed opportunity.

But I don't think it was the wrong move at the time. Hindsight is perfect. On Monday what we knew was that most CEOs of financial companies had been, to put it mildly, way too optimistic and bullish. We knew Wachovia was troubled, we'd been briefly taken in by Dick Fuld of Lehman Brothers, and what we'd seen from Steel and Wachovia seemed to fit the pattern of every other financial that had gone down. It was wrong not to trust Bob Steel, but as a general rule, distrusting bank CEOs is the way to go in this market.

Cliff Mason is the Senior Writer of CNBC's Mad Money w/Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Richand Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like.

Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?