Jim Cramer Dismisses Comparison Between Credit Suisse and Lehman Brothers
Jim Cramer, head of CNBC’s Mad Money, disagreed with today’s comparisons of Credit Suisse to Lehman Brothers.
Credit Suisse, a global investment bank with over $1.6 trillion in assets under management, is reportedly at a “critical moment.” However, Jim Cramer isn’t very concerned.
Cramer Doesn’t Seem Phased by Credit Suisse Troubles
Today, Credit Suisse’s credit default swaps reached fresh all-time highs, signifying that investors rushed to protect themselves from a debt default. After Credit Suisse CEO Ulrich Koerner sent a note to staff members recognising the company was at a “critical point” in its restructuring efforts, the market reacted accordingly.
The financial instability surrounding the bank has drawn parallels to the fall of Lehman Brothers in 2008, which set off a chain reaction that ultimately led to a worldwide recession. Credit Suisse handled approximately $1.6 trillion in 2021, according its most recent financial report, whereas Lehman Brothers had $639 billion in assets at the time of its bankruptcy.
Mad Money anchor Jim Cramer, on the other hand, is not concerned. “People keep talking about a Lehman moment,” he stated today on CNBC. “I keep thinking, you’re finally going to be able to get a bank merger. You can isolate the losses at Credit Suisse, and whomever gets it is going to do fairly well, because, man, that is one fantastic franchise.”
Cramer’s bad trading recommendations have made him infamous in the cryptocurrency industry. For example, in April, when Ethereum was trading at almost $3,000, he stated investors could “easily get [returns of] 35 to 40%”—but the coin dropped more than 66%, to about $888. Cramer said cryptocurrencies had “no actual value” on July 5, after Ethereum’s price had settled at around $1,000″. Ten days later, Ethereum started climbing, and by the end of the month, it had reached a high of $2,016.
Cramer has made some questionable predictions in the past when it comes to the more conventional equity markets. In 2008, Cramer famously advised his audience not to sell Bear Stearns stock, shouting “Bear Stearns is fine!” and “Don’t be silly!” at the camera. Six days later, on the day it was announced that JPMorgan and the Federal Reserve would buy out the failing Wall Street firm for $2 per share, Bear Stearns shares dropped by more than 90%.
Some cryptocurrency investors have taken advantage of the Mad Money host’s lack of trading knowledge. One of them developed what he called a “inverse Cramer” trading strategy, in which he would go long when Cramer was negative and short when he was bullish. His bank balance, he said on August 22, had increased to nearly $100,000, quadruple its previous value of $50,000.
Cramer’s confidence in Credit Suisse is unsettling, given his track record. Archegos Capital, a subsidiary of the investment business, lost around $5.5 billion when the family office collapsed in March 2021. In August, analysts at Deutsche Bank speculated that Credit Suisse might require as much as $4.0 billion to implement a business reorganisation and downsizing. In November 2021, the business stated it will stop providing prime brokerage services to institutional investors.
