The Political Whore

CNBC’s reputation-damaged investment show host Jim Cramer just told The Today Show that the “banking nightmare” is over as a result of the stress tests on banks being released today.

His point? That even though a few banks still need billions to shore up their balance sheets, they are making money and likely can raise those extra funds in the market – not from taxpayers.

Bloomberg reports that the market indeed likes the results of the financial stress tests:

Stocks rallied after the news, sending the Standard & Poor’s 500 Financials Index to its highest level in four months. The results are the culmination of weeks of investigations, led by the Federal Reserve, into the banks’ lending practices, funding strategies and securities and loan portfolios.

“The markets are telling us we’re in a recovery and the banks are beginning to heal,” William Isaac, former chairman of the Federal Deposit Insurance Corp., said in an interview today. The end of the stress tests after “three months of water torture” is providing investors some relief, he said.

The regulators put an emphasis in their reviews on tangible common equity, and will give firms needing bigger reserves six months to meet their requirements. Citigroup’s assessment reflects the New York-based bank’s previously announced plan to convert some of its preferred shares into common stock.

The California congresswoman has been through redlining fights, predatory lending fights, and lots of other grievances with the banking system. And she’s seen nothing like the current screwing that credit cardholders are taking from U.S. banks that are enjoying TARP money.

Watching this is 7 minutes and 8 seconds well spent, even if it does mean listening to Waters’ convoluted (and I’m being extremely generous) questions.

The markets are sharpy down today, more than 300 points by 1:15 p.m., after the announcement of the revamped and renamed TARP financial industry bailout plan (now called FSP for Financial Stability Plan) by Treasury Secretary Timothy Geithner. Here’s is what it looks like on StockCharts.com:

Geithner’s full remarks after the jump.

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The Florida Home Builders Association is in such dire straits that it actually called a newser today to announce that the banks are killing them:

Here’s what’s happening in a nutshell: Banks that gave loan to builders in better economic times are now reappraising the value of their loans. The loans were based on earlier projections of home prices and, now that those values have dropped — by as much as 30 percent — banks want builders to make up the difference. Banks are conducting ‘capital calls’ and demanding large amounts of cash from these builders to restore the original loan-to-value ratio.

No surprise, the builders can’t manage it. “The cash call is forcing builders into insolvency,” said Jay Carlson, president of the Florida Home Builders Association. The building industry troubles that are already wreaking havoc on the state’s budget “have gotten much worse and the result will be further deterioration of Florida’s economy.”

The answer, they all say, is a time out — not a bail out. They want a moratorium on lending insitutions calling in loans. They want government — state and federal — to help homeowners to stop the spiraling decine in homeownership that has 54,000 homes in foreclosure in Florida and homes around all of them rapidly declining in value. And they want Congress to stop banks from taking bail-out money on the front end, but closing credit to builders on the back end.

Read more here.