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.
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, UBS , Wells Fargo , JP Morgan and Bank of America 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