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Barack Obama tapped into voters' concerns about the economy and it’s widely believed that he will now make fixing the economy job one.
"At a moment like this, we can't afford four more years of spending increases, poorly designed tax cuts, or the complete lack of regulatory oversight," Obama wrote in an opinion piece penned for the Wall Street Journal..
For Wall Street that probably means a flurry of laws aimed at protecting homeowners and borrowers while tightening restrictions on banks and the investments they sell.
Oppenheimer’s Meredith Whitney tells CNBC that she expects to see "loan modifications". In other words, she expects banks to restructure troubled mortgages to help homeowners stay in their houses. But there will be a price to pay. “Going forward you’ll probably start to see contraction in the mortgage market,” she says.
Future Earnings
Whitney also tells us she thinks banking sector analysts are way off the mark in their earnings estimates. “My estimates are 30- 70% below the Street and I think I’m still too high.”
As a result, “I think Citigroup [C
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], UBS [UBS
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], Wells Fargo [WFC
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], JP Morgan [JPM
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] and Bank of America [BAC
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] stock are likely to fall. In fact, “Citigroup could trade in the single digits.”
“They can’t cut costs fast enough to keep up with declining revenues. There will likely be a protracted period of negative operating leverage.”
What’s the bottom line? According to Meredith Whitney, “I think we’re in for a rude awakening” in the banking sector.
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CNBC.com with wires
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