Timothy Geithner holds the fate of the markets and the economy in his hands, Cramer told viewers on Wednesday. We need a plan to save the banks, and it’s the Treasury Secretary’s job to provide it. But he hasn’t yet met that obligation. Wall Street, the public, everyone has waited with baited breath for even the slightest peep from Geithner, but he hasn’t come through for us. If he doesn’t act soon, then the damage in this one sector will continue to ripple out to the retirement accounts of the very people who voted his boss into office.
Cramer does understand the enormity of Geithner’s task, though. He has to find a balance between angry taxpayers and failing banks right in the middle of this AIG bonus debacle. Both politicians and their constituents are outraged that a company would reward executives at all in this environment – let alone those that caused many of AIG’s problems. No doubt the populist furor is reaching its feverish pitch. Still, Geithner must find a way to convince us that these banks need saving.
Cramer’s solution: Label AIG an anomaly. Separate this behemoth insurer from the banks, which we need healthy if we’re ever to escape this downturn.
Sure, blundering mistakes were pervasive across the entire financials sector. But AIG went beyond just greed and stupidity. This company’s actions were, as Cramer sees them, downright criminal. He thinks AIG intentionally tried to evade worldwide capital rules by insuring products that it couldn’t afford to insure. Of course, only an official government investigation could tell us for sure. But Cramer was willing to venture a guess that AIG was more than just a case of bad judgment.
Bottom line, we can’t afford to make the entire financials sector guilty by association with AIG. Not when the banks are just starting to show signs of life again. Bank of America, Citigroup and Wells Fargo all have said they were profitable this year.
Geithner needs to emphasize how important that is for everyone involved – homeowners, shareholders, retirees – while at the same time holding AIG responsible for its actions. The Treasury secretary needs to be pro-shareholder, pro-homebuyer, pro-pension plan, pro-student loans and pro-job creation, all rolled into one. Demonizing all of the banks, no matter how poorly AIG acted, puts any chance of recovery into jeopardy.
Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, AIG – if Cramer got his way, no one would escape unpunished. But right now punishment’s sake is wrong. In the end, the people who really get hurt are those voters, and their retirement accounts.
Cramer's charitable trust owns Wells Fargo.
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