Wall Street's abject fear of Democratic Sen. Elizabeth Warren getting into the White House is a mistake, CNBC's Jim Cramer said Tuesday.

"The fear of Sen. Warren is getting overblown," Cramer said on "Squawk on the Street," three weeks after he said that financial industry CEOs were telling him that "she's got to be stopped."

"I want to stop the fear of Sen. Warren. I really think that's a mistake," Cramer said Tuesday, as the liberal firebrand continues to climb in the race for the Democratic presidential nomination.

When the "Mad Money" host reported on the extent of Wall Street's worries about Warren on Sept. 10, the Massachusetts senator was No. 2 in the Real Clear Politics polling average with 18% support. At the time, former Vice President Joe Biden led the crowded field with nearly 30% support. As of Sunday, the RCP polling average showed Warren narrowing the gap with Biden, with 23% support to his 27.2%.

Cramer said Tuesday on CNBC that "I don't think she's nearly as anti-business" as portrayed. He also said jokingly, "I think there is such a thing called Congress," suggesting more seriously that her banking-bashing and wealth-taxing proposals could not unilaterally go into effect if she were to become president.

Last month, Warren sought to capitalize on Cramer's initial September comments about Wall Street being scared of her candidacy.

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In the midst of all the talk about CEOs fearing Warren, Cramer said he respects her. "You have a soft spot for her, it seems," CNBC host Carl Quintanilla said to Cramer on Sept. 12. "Yes," Cramer replied, saying it's "because I think she has thought about the people who are not doing well in the country, and that is great."