Cramer's Mad Money - The Bank That Escaped the Credit Crisis (6/24/09)

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Wednesday June 24.

CEO Ronald Hermance, Hudson City Bancorp (HCBK)

Cramer thinks the Fed's decision to keep net interest margin (the difference between what the banks pay for deposits and what they charge for loans) at 0% to 0.25% is good news for Hudson City Bancorp, which has remained virtually unscathed by the credit crisis so far and has not received TARP money. The bank also has $13.7 billion in certificate of deposits at 3.1%. The average rate for CDs is around 2%, so Hudson City's net interest margin will look good as these expire in the next 12 months. The retention rate for CDs is high, at around 90%, and Hermance told Cramer that the bank expects a "very similar amount" to the number of deposits in the first quarter. With a clean balance sheet and a raised dividend, Hudson City is a buy, according to Cramer.

We Need Bernanke, Oracle (ORCL)

In response to questions about Fed Chairman Ben Bernanke's integrity, Cramer said, “Ben Bernanke’s the single most honest and independent man I’ve come across in 30 years on Wall Street." This might sound odd, given Cramer's famous "They know nothing!" rant over the Fed's delay in lowering interest rates, but a couple of years later, Ben Bernanke has more than redeemed himself, according to Cramer.

He says Rep. Darrell Issa's allegations that Bernanke forced a shotgun wedding between Merrill Lynch and Bank of America and hid important details about the merger are preposterous; the Fed was "completely and utterly incapable of doing what Issa described," said Cramer. He thinks there could have been a rally on Wednesday as the Fed announced rates would remain steady and made bullish remarks about the economy. The allegations took attention away from strong stocks, such as Oracle which brought up the Nasdaq when it announced a solid quarter. Cramer said the Fed Chairman is a hero, not a con man and should be reinstated in January. "We need Bernanke," Cramer said.

CKE Restaurants (CKR) CEO Andy Pudzer

Cramer recommended CKE as a speculative play in May, and those who invested have seen a 12.5% gain so far. CKE has launched an ad campaign featuring supermodels and celebrities on its commercials, but is this enough to help the company grab market share from McDonald's and Wendy's?

While CEO Andy Pudzer acknowledged earnings are slow and same-store sales are flat, the company faces pricing pressures and the need to remodel many of its stores. Pudzer says treading water is fine for the time being, and will concentrate on the quality of its products while resisting the temptation to engage in a ruinous price war. Pudzer adds he has received positive feedback on CKE's commercials and on its new breakfast menu at Hardees stores. Cramer says this news is good enough to hold the stock for the long term.

Cramer's Outrage: Trouble in the Citi (C)

Cramer was appalled that Citigroup announced a pay increase, in some cases as much as 50%, for Citi employees to avoid anger at generous year end bonuses for executives. Since the taxpayers own 34% of the bank, which hasn't paid back its TARP money, the pay raise was even more egregious. Apparently, Washington was taken unawares by Citi's plan, and Cramer says the situation can be mended by having a government person replace Alan Belda, head of Citi's compensation department.

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Comments

[bostonbabe:]

Is he crazy when he says put government in charge of paychecks for Citibank?! What is wrong with this manic man...

Jun 25 07:27 AM

[Texman:]

I find it increasingly difficult to watch Jim. I was troubled by his endorsement of the government limiting pay. Jim shared his "feelings" about how much the Citicorp bankers should make. Neither Jim nor Barney Frank have any business making that decision. Yes, I know Citicorp took TARP money, but that does not give the government authority to run your business; that's a recipe for disaster. I was also disappointed that Jim (and every other CNBC talking head) jumped to Ben Bernanke defense. Jim was especially irritating because he attacked Rep. Issa. That's the old playbook of attacking those with whom you disagree. Bad form. The evidence suggests the Fed threatened to fire Lewis and his board if they blocked the Merrill acquisition. That is coersion, and our government should not do that.

Jun 25 08:55 AM

[DownOnMyLuck:]

Debt holders have a right to certain covenants pertaining to the debts. If Citi didn't want to be under the aegis of the Govt., they should have raised money privately - if they could have. Otherwise, as long as they are welfare queens, they have to play by the govt. rules.

Jun 25 09:46 AM

[Steve Soden:]

Jim Cramers days on CNBC may be numbered.
Remember when he first started with his 15 minute slots on CNBC?
This guy has run out of fame.

Jun 25 11:42 AM