GO
Loading...

Enter multiple symbols separated by commas

Whitney:  Banks On Life Support Next 18 Months

Influential bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that "lubricate the economy" is grim.

"The big banks are going to be on life support for at least 18 months, if not 36 months,"

global_markets_06.jpg

Oppenheimer's executive director of equity research told CNBC Wednesday morning. "The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years."

She echoed other analysts who see the funds from the TARP program being used to fill holes, and do nothing to stimulate the economy.

"You've had massive asset deflation," she said. "There's more of this to come."

An example? The Wednesday morning report that American International Group owes Wall Street investment banks about $10 billion for speculative trades that went bad.

(See Whitney's full interview in the video)

Recent remarks by Whitney have been market-movers.

Earlier this month, shares of Wells Fargo fell 19 percent after she called the company her biggest "sell" recommendation among financials. In the same interview, she also said the credit-card industry may cut two trillion dollars in credit lines over the next 18 months.

And that, she said Wednesday, is the next major trauma in the credit crisis.

"Just over 70 percent of American households have credit cards, but over 90 percent of those households revolve at least one time a year, so they're using it as a cash flow management vehicle," she explained. "The banks now are starting to cut those lines back. That will impact spending."

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • In a rare menu test, Chipotle is testing a Chorizo Burrito, a spicy sausage made with chicken and pork, in its Kansas City restaurants.

    In a relatively a rare move for Chipotle Mexican Grill, Chipotle began testing a new menu item Tuesday.

  • A prototype of a Diebold bank branch of the future.

    Big banks are spending on futuristic branches, but it's all a waste of time and money, say financial technology experts.

  • Nouriel Roubini

    Nouriel Roubini explains how and why more economic liquidity may have led to "severe market illiquidity."

U.S. Video