Jim Cramer is not worried about Credit Suisse. Does that mean we should be?

Global investment bank Credit Suisse, with more than $1.6 trillion in assets under management, is facing a “critical moment“, according to its CEO. But Jim Cramer is not particularly worried.

Credit Suisse’s troubles don’t worry Cramer

Today, the investment bank’s credit default swaps hit new all-time highs, signaling that Credit Suisse investors rushed to protect themselves from a potential default on the institution’s debt. The market moves came after Credit Suisse CEO Ulrich Koerner issued a memo, acknowledging that the company was facing a “critical moment” in its restructuring plans.

The uncertainty surrounding the bank’s financial situation has prompted comparisons to Lehman Brothers, whose collapse in 2008 set off a domino effect that eventually led to a global recession. According to its latest financial report, Credit Suisse had more than $1.6 trillion in assets under management in 2021, while Lehman Brothers had $639 billion in assets at the time of its closure.

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However, one market expert is not worried about the situation: Mad Money American animator Jim Cramer. “People keep talking about a Lehman moment,“it said today on CNBC. “I keep thinking, you’re finally going to get a bank merger. And whoever gets Credit Suisse will do pretty well if they can limit those losses, because it’s a big bank.

Jim Cramer became a “legend” in the crypto space for his terrible trading calls. For example, in April, when Ethereum was trading near $3,000, he said investors could “easily get [un retour sur investissement] 35 à 40 % ” – but the coin dropped more than 66 percent to about $888. Then, on July 5, after Ethereum had stabilized at about $1,000, Cramer said the crypto had “no real value“. Ethereum recovered ten days later and eventually peaked at $2,016 in one month.

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Cramer’s track record with the traditional equity markets is not without its blemishes either. In 2008, Cramer advised his audience not to sell Bear Stearns stock, shouting on camera “Bear Stearns is fine!” and “Don’t be stupid!“. Six days later, Bear Stearns shares plummeted more than 90 percent in a single day after news broke that JPMorgan and the Federal Reserve would buy the failed Wall Street bank at $2 a share.

Given its track record, Jim Cramer’s optimism about Credit Suisse is worrisome. The investment firm has suffered significant losses in recent years, including about $5.5 billion for Archegos Capital when the family office exploded in March 2021. In August, analysts at Deutsche Bank estimated that Credit Suisse may need up to $4 billion to restructure and downsize its business. In November 2021, the company announced it would stop providing prime brokerage services, including financing, custody, clearing and advisory services to institutional investors.

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