Cramer on $BAC

Did Bank of America ($BAC) give away the store to Warren Buffett? Does it not matter? Is Doug Kass within the realm with his "Say It Ain't So, Brian"?

Here’s my take. I heard this same sort of criticism when Prince Alaweed took the historic plunge and bought a huge chunk of Citigroup ($C), the first time it imploded in 1990-1991. People thought that the store had been given away. That the dilution was ridiculous. The critics were ridiculous. He saved Citigroup.

Now Bank of America wasn’t in as bad shape as Citigroup back then. But you have to understand that the pressure on this institution’s stock was eventually going to show up on the ratings agencies’ screens. We know that they downgrade when they see stocks plummet endlessly. We saw that time and again. Even when they shouldn’t.
Bank of America has a gigantic deposit base, so a run on the bank is pretty inconceivable. But notice the caveat “pretty.” We have learned that when people do not trust banks, they have a habit of needing outside help. There is no doubt in my mind that the shorts were trying to break this bank and its big shareholders, forcing the company not into a dilutive fund raise but into a handout from the government.
That would be catastrophic for bank shareholders and dreadful for the stock market.
That’s what was averted here.
So I say, three cheers for Warren. I know the market is ugly today, but you take that systemic issue off the table, and you know how much better things are now than they were. I now trust the book value. I now believe the mortgage issues will work out over time.

Does that mean I think that BAC is a double? I wish so. Can it go up 50%? I hope so -- my charitable trust owns some.

But what I care about is catastrophe here removed. We have enough over there in Europe. This is good news, and the price? Well, let's just say it’s downright cheap versus the alternative.