Taxpayers Will Be Losers in Rescue Plan: Whitney

Taxpayers will lose money in the $700 billion government rescue plan for the nation's banking system, Oppenheimer analyst Meredith Whitney said.

Contrary to predictions from some supporters of the bailout plan, Whitney said on CNBC that the continued slump in housing prices will make a profit from the bailout unlikely.

"I think you definitely lose money on this $700 billion structure," Whitney said. "There's no idea where house prices bottom, and as a result how can you make money on this transaction?"

She said home ownership rates are still too high at about 69 percent and need to fall below 66 percent as more subprime mortgages given to less-qualified borrowers unwind.

At the same, she said the government may be misallocating assets in the bailout to institutions that do not deserve help.

"The government needs to decide who are going to be the winners and who are going to be the losers," she said. "You're basically going to put a lot of institutions on life support that are going to fail ultimately anyway. Why not put capital towards the winners?"