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CNBC EXCERPTS: MEREDITH WHITNEY, MEREDITH WHITNEY ADVISORY GROUP, ON CNBC’S “SQUAWK BOX” TODAY

WHEN: TODAY, WEDNESDAY, JUNE 8TH

WHERE: CNBC’S “SQUAWK BOX

Following are excerpts from the unofficial transcript of a CNBC interview with Meredith Whitney, Meredith Whiney Advisory Group, today, Wednesday, June 8th on CNBC’s “Squawk Box.” All references must be sourced to CNBC.

WHITNEY ON THE STIMULUS MONEY RUNNING OUT:

THE MUNI DEFAULTS IS A CONSEQUENCE OF THE INCREDIBLY PRECARIOUS FISCAL SITUATION THE STATES ARE IN. SO, THE MUNI DEFAULTS IS AN AFTER-EFFECT. THE NUMBERS BEING -- WE'RE IN OUR FOURTH CONSECUTIVE YEAR OF OVER $100 BILLION IN STATE BUDGET GAPS. THIS MONTH, THE FEDERAL STIMULUS MONEY RUNS OUT. NOW, THE FEDERAL STIMULUS MONEY OVER $480 BILLION WENT TO STATES. AND ITS PADDED BUDGET GAPS BY 37%. SO, THE ABSENCE OF THIS FEDERAL SUPPORT IS A BIG DEAL.

WHITNEY ON STATE SPENDING CUTS:

THE FEDERAL GOVERNMENT MADE IT MUCH EASIER FOR STATES TO AVOID VERY DIFFICULT SPENDING CUTS ALTHOUGH THEY MADE SPENDING CUTS. WHEN THIS -- WHEN THIS RUNS OUT, YOU HAVE OHIO SAYING THEY'RE GOING TO CUT 25% OF AID TO MUNICIPALITIES. YOU HAVE MOST STATES SAYING THEY'RE GOING TO DO THAT. SO, YOU'LL SEE THE PINCH. IT WILL ACCELERATE THROUGHOUT THE REST OF THE YEAR.

WHITNEY ON DEBT:

YOUR MINIMUM PAYMENT TO SERVICE THOSE -- SERVICE THAT DEBT, BECAUSE STATE TAX DOLLARS ARE AS EQUALLY OBLIGATED TO PENSION FUNDS AND OTHER POST-EMPLOYMENT BENEFITS AS THEY ARE TO GENERAL OBLIGATION BONDS. YOU HAVE TO LOOK AT THE TOTALITY. 75% OF STATE DEBT IS OFF BALANCE SHEET. THAT'S GROWING SO FAST.

WHITNEY ON RESEARCH:

THIS IS THE DARKEST POOL OF ANY RESEARCH I'VE EVER DONE. DISCLOSURE IS TERRIBLE. THE INFORMATION -- WE USED PUBLIC DATA BUT IT HASN'T AGGREGATED. SO, WHEN WE FIRST DID OUR ANALYSIS IN SEPTEMBER WE WERE USING 2008 PENSION DATA. BUT WE FOUND -- BUT WE COULDAGGREGATE 2009, SOME 2010 PENSION DATA.THE AMOUNT OF UNFUNDED PENSIONS LIABILITY GREW BY 50% IN ONE YEAR.

WHITNEY ON STATE BUDGETS:

46 STATES HAVE A FISCAL YEAR-END THIS MONTH. 46 STATES HAVE TO SUBMIT BALANCED BUDGETS. ONLY NOW ARE YOU GOING TO SEE REALLY TOUGH CHOICES BEING MADE.BUDGET PROPOSALS HAVE BEEN OUT BUT WHAT ACTUALLY COMES TO FORE? IT'S NOT JUST THIS YEAR THE BUDGET SITUATION GETS RESOLVED. YOU'RE EXPECTING THREE MORE YEARS OF BUDGET GAPS.

WHITNEY SAYS I KNOW I'M RIGHT:

I KNOW I'M RIGHT ON THIS. SO, I HAVE -- YOU KNOW, I HAVE CONVICTION AND CONFIDENCE IN MY WORK. IF THE MARKET MOVES AWAY -- LOOK, TREASURIES HAVE OUTPERFORMED AS WELL. THERE'S SPREAD TIGHTENING. ALSO YOU HAVE A SUPPLY ISSUE IN TERMS THERE HASN'T BEEN BIG ISSUANCE IN MUNICIPAL MARKETS SO TINTING OF SUPPLY, TOO, AND PEOPLE ARE DESPERATE FOR YIELD.

WHITNEY ON SPENDING:

THE U.S. CONSUMER GETS A VERY BAD RAP FOR RECKLESS SPENDING. IF YOU LOOK AT CONSUMER SPENDING VERSUS STATED, STATE GREW SPENDING 35% FASTER THAN U.S. CONSUMERS IN THE PAST DECADE. SO, YOU HAD STATES SPENDING WELL OVER TWO TIMES THEIR TAX RECEIPTS.IT'S UNSUSTAINABLE.

WHITNEY ON DIMON:

YOU CAN'T BLAME IT ON REGULATORY ISSUES ALONE. I THINK -- I IMAGINE WHAT DIMON IS SAYING IS, DON'T MAKE US LESS COMPETITIVE THAN OUR EUROPEAN PEERS WHO ARE LESS CAPITALIZED I'M SURE THEY'RE FRUSTRATED ON, YOU KNOW, A NUMBER OF LEVELS. THEY'RE GOING TO HAVE TO RECONCILE AND RATIONALIZE THEIR EXPENSE BASE. BUT TO BLAME IT SOLELY ON REGULATORY ISSUES, THE REGULATORY ISSUES ARE NOT HERE NOW.

WHITNEY ON HOUSING:

THE HOME AFFORDABILITY MODIFICATION PLAN REALLY JUST DELAYED THE PAIN AND CREATED AN INCREDIBLE FORECLOSURE GLUT, HOUSING GLUT. THE FACT IS NO HOUSE -- HOUSE MOVEMENT IS VERY, VERY SLOW. IT'S VERY DIFFICULT TO GET A MORTGAGE TODAY. SO, MORTGAGE ORIGINATIONS ARE INCREDIBLY SCARCE. SO, YOU HAVE A SUPPLY/DEMAND IMBALANCE THAT JUST ISN'T WORKING.

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