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CNBC EXCLUSIVE:  CNBC TRANSCRIPT:  CNBC'S MARIA BARTIROMO SPEAKS WITH MEREDITH WHITNEY, EXECUTIVE DIRECTOR OF EQUITY RESEARCH AT OPPENHEIMER & COMPANY TODAY ON CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

WHEN: TODAY, WEDNESDAY, JANUARY 14TH

WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"

Following is the unofficial transcript of a CNBC EXCLUSIVE interivew with Meredith Whitney, Executive Director of Equity Research at Oppenheimer & Company.

All references must be sourced to CNBC's "Closing Bell with Maria Bartiromo."

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BARTIROMO: IN A CNBC EXCLUSIVE I'M JOINED RIGHT NOW BY MEREDITH WHITNEY, EXECUTIVE DIRECTOR OF EQUITY RESEARCH AT OPPENHEIMER & COMPANY AND HAS BEEN SPOT ON ON THE SUBJECT.MEREDITH, THANKS FOR BEING ON ONCE AGAIN.LET ME ASK YOU TO TAKE A CRACK AT THAT QUESTION. HOW DO YOU VALUE THESE BANKS YOU? STILL HAVE AN UNDERPERFORM ON CITI AND YOU STILL THINK WE COULD SEE SOME TROUBLE IN '09, RIGHT?

WHITNEY: I THINK YOU'RE GOING TO SEE TROUBLE IN '09 AND EXTENDED POTENTIALLY INTO 2010 AND WHERE EARNINGS ESTIMATES ARE FORECAST I THINK THAT IS HIGHLY UNLIKELY TO THE EXTENT THAT ALREADY THEY BROUGHT THEIR ESTIMATES DOWN FOR '09.BUT THEY'RE EXPECTING '10 TO BE A BETTER SCENARIO WHEN ALL THESEBANKS WILL BE WITH SIGNIFICANTLYREDUCED ASSET BASES.WE DON'T EVEN KNOW WHAT THESE BANK STRUCTURES ARE GOING TO LOOK LIKE.I THINK THERE'S GOING TO BE SO MANY MOVING PIECES AND SO MANY ENTITIES THAT LOOK VERY DIFFERENT IN SIX, NINE MONTHS THAN THEY DO TODAY. IT'S EVEN HARDER TODAY THAN IT EVER HAS BEEN TO MAKE ESTIMATES FOR THESE BANKS.

BARTIROMO: SO WHAT DO YOU DO, THEN? WHAT DO YOU THEY WILL INVESTORS? HOW DO YOU APPROACH THIS GROUP? I KNOW THAT BEFORE THANKSGIVING YOU HAD A REPORT OUT SAYING THAT YOU SUGGESTED THAT ALL THE TARP MONEY RAISED WOULD BE WIPED OUT.DO YOU STILL BELIEVE THAT?

WHITNEY: I DO. I THINK, YOU KNOW, WHAT'S INCREDIBLE ABOUT THAT IS THAT --I TITLED THE REPORT "GOBBLE GOBBLE" RIGHT BEFORE THANKSGIVING, THAT ALL THE TARP MONEY WOULD BE WIPED OUT.AND THAT HAS HAPPENED REALLY FAST.THAT'S $350 BILLION IN TARP MONEY.

NO SMALL AMOUNT OF MONEY.SO WHAT WILL HAPPEN IS WHEN THE BANKS COME BACK FOR MORE CAPITAL AND IT LOOKS LIKE THE WAY THEY'RE GOING TO COME BACK FOR MORE CAPITAL IS JUST TO SELL STUFF, AND I WANT TO GET BACK TO THAT IN A SECOND, COMMON EQUITYSHAREHOLDERS GET FURTHER DILUTED. THERE'S A VERY SIMILAR PROBLEM THAT YOU HAVE WITH BANKS' REFUSAL TO SELL ASSETS, WHICH WAS A SIMILAR PROBLEM THEY HAD WHEN THEY REFUSED TO SELL CDOs BECAUSE THEY DIDN'T LIKE THE PRICES BEING OFFERED.THE GUYS WHO SOLD EARLY WERE ABLE TO MAKE MORE ON THAT TRADE. THAT WOULD BE GOLDMAN SACHS.THE GUYS WHO SOLD LATER HAD TO CONSISTENTLY WRITE THEIR ASSETS DOWN.I THINK THE SMITH BARNEY TRANSACTION WILL LOOK LIKE AN EXPENSIVE DEAL IN THREE TO SIX MONTHS FROM NOW.

SO GOOD FOR THEM THAT THEY MONETIZED IT EARLY. BUT THESE BANKS HAVE GOT TO BE FORCED TO HIT WHATEVER BID IS OUT THERE IN THE MARKETPLACE. AND THEY HAD BEEN SO FAR RELUCTANT TO DO SO.

BARTIROMO: SO CLEARLY THE FIRMS WITH THECASH ARE GOING TO BE WELL POSITIONED HERE TO SORT OF ACQUIRING SOME OF THESE ASSETS THAT ARE NO DOUBT GOING TO BE ONTHE BLOCK INCREASINGLY.

WHITNEY: YEAH.UNFORTUNATELY, A LOT OF THE BANKS ARE NOT THOSE FIRMS THAT HAVE CASH.THERE ARE GUYS WHO ARE ON THE SIDELINES.

SO HIGHLY COVETED ASSETS WON'T GO TO OTHER BANKS UNLESS IT'S GOVERNMENT ORCHESTRATED. SO I THINK YOU'RE GOING TO HAVE SHOTGUN MARRIAGES OVER THE NEAR TERM, WHICH MAY, YOU KNOW, AS THE EXPRESSION GOES, GET THE BAND BACK TOGETHER. AND YOU'LL SEE BUSINESS THAT'S HAD BEEN TOGETHER DECADES AGO COME BACK TOGETHER. AND I THINK THERE'S GOING TO BE A LOT OF CHANGE. BUSINESSES AMAZINGLY, FOR THOSE WHO HAVE MONEY, AND I SAID THIS AS A JOE KENNEDY STYLE INVESTMENT ERA.IF YOU HAVE MONEY, YOU CAN MAKE A FORTUNE. IF YOU DON'T HAVE MONEY, YOU'VE GOT TO SELL AT DISTRESSED PRICES. BUT FOR EXAMPLE, YOU CAN BUY OFF THE MENU TYPE ASSETS, ASSETS YOU WOULD NEVER IMAGINE WOULD BE FOR SALE, WHICH WILL COME FOR SALE.NOW, FOR COMMON SHAREHOLDERS THIS IS IMPORTANT. YOU'RE GOING TO GET FURTHER DILUTED. IT'S DANGEROUS TO BE IN SOME OF THESE STOCKS BECAUSE THE STOCKS WILL GO LOWER BEFORE THEY GO HIGHER AGAIN.

BARTIROMO: LET ME ASK YOU ABOUT THIS UPCOMING EARNINGS SEASON OR LOSS SEASON, OBVIOUSLY. WE'VE GOT JPMORGAN AND CITI REPORTING THEIR QUARTER IN THE NEXT COUPLE OF DAYS.WHAT ARE YOU EXPECTING? THERE WAS TALK OUT THERE THAT CITI COULD LOSE $10 BILLION IN A THREE MONTHS PERIOD? HOW DO YOU SEE IT?

WHITNEY: THAT'S NOT FAR-FETCHED. THE THINGS I KNOW FOR CERTAIN IS THE BANKS AT A MINIMUM HAVE TO CATCH UP ON A RESERVE BASIS. SO ALL THESE BANKS GOING INTO THIS QUARTER HAD PEAK TO TROUGH HOME PRICE ASSUMPTIONS THAT ARE WAY TOO LOW. ALREADY PEAK TO TROUGH HOME PRICES ARE ALREADY DOWN 25% ACCORDING TO KAY SCHILLER. AND THE BANKS ARE ASSUMING ABOUT A 25% PEAK TO TROUGH ASSUMPTION SO CLEARLY THEY'VE GOT TO REVISE THOSE THAT'S GOING TO BE A BIG HIT TO RESERVES.THEY'RE ALSO ASSUMING UNEMPLOYMENT LEVELS OF 7%. UNEMPLOYMENT'S ALREADY 7.2, 7.3. THAT'S GOT TO GO HIGHER.YOU'RE GOING TO SEE A BIG SORT OF CATCH-UP IN RESERVES. YOU'RE ALSO GOING TO SEE A BIG WRITEDOWN IN TERMS OF FURTHER DEVALUATION OR DEFLATION OF ASSET SECURITIES HELD. AND THIS IS SOMETHING WE POINTED OUT LAST WEEK THAT NO ONE REALLY TALKS ABOUT BUT IS A BIG DEAL. EVERY TIME THE RATINGS AGENCIES DOWNGRADE SECURITIES THE BANKS HAVE TO HOLD MORE CAPITAL AGAINST THOSE SECURITIES. TWO, OR 50% OF ALL THE DOWNGRADES THAT HAVE OCCURRED SINCE THE ONSET OF THE CREDIT CRISIS OCCURRED IN THE FOURTH QUARTER. SO TO THROW NUMBERS OUT, IN THE FOURTH QUARTER OF 2007 UNDER 200 BILLION OF SECURITIES WERE DOWNGRADED. IN THE FOURTH QUARTER OF 2008 OVER 1.4 TRILLION IN SECURITIES WERE DOWNGRADED.SO THERE'S SO MANY PRESSURES, CAPITAL-RELATED PRESSURES THAT ARE GOING TO GO ON DURING THISQUARTER. NOW, THESE ARE JUST THE THINGS THAT I KNOW ABOUT. I'M SURE THERE ARE A HAUTE OF ISSUES THAT I HAVEN'T EVEN THOUGHT ABOUT YET.AND SO IT'S GOING TO BE MORE DISRUPTIVE I THINK EVEN THAN THEMOST BEARISH INVESTOR EXPECTS.

BARTIROMO: MEREDITH, AS AN INVESTOR SHOULD I BE SELLING CITIGROUP AT$4.53 A SHARE?SHOULD I BE SELLING GOLDMAN AT 75.69?

JPMORGAN AT 25.91? THESE STOCKS, DO THEY GO LOWER FROM HERE?

WHITNEY: I THINK THEY GO LOWER BEFORE THEY GO HIGHER.I GUESS THAT'S A KIND WAY OF SAYING I WOULD DIVERSIFY OUT OF FINANCIALS HERE.

BARTIROMO: ANYTHING YOU WOULD BE BUYING IN THE ENTIRE UNIVERSE IN TERMS OF FINANCIAL SERVICES?NOT NECESSARILY THOSE STRAIGHT ON, YOU KNOW, QUALITY VANILLA BANKS, IF YOU WILL.

WHITNEY: I THINK AT THE RIGHT PRICE THERE'S GOING TO BE AN INTERESTING PLAY WITH AMERICAN EXPRESS TO THE EXTENT THAT AT THE RIGHT PRICE YOU KNOW THAT A LOT OF PEOPLE WANT TO BUY AMERICAN EXPRESS AND AT THE RIGHT PRICE -- WHEN I SAY THE BAND GETTING BACK TOGETHER, AMERICAN EXPRESS MAY BE IN A POSITION TO STEWARD SOME OF THESE SHOTGUN MARRIAGES IN TERMS OF OTHER CREDIT CARD RECEIVABLES THAT MAY COME ON THE MARKET OVERTHE NEAR TERM, YOU KNOW, READ CITI. SO I THINK AT THE RIGHT PRICE YOU'VE GOT -- VERY SIMILARLY THEIR FUNDING NEEDS WILL BE MET.COULD BE MET. I DON'T KNOW ANYTHING.BUT YOU COULD SEE A TRANSACTION LIKE THAT AND IT'S A VERY VALUABLE FRANCHISE.

BARTIROMO: AMEX WOULD BE A BUYER OR SELLER?

WHITNEY: I WOULD BE A SELLER AT THESE LEVELS.I WOULD BE A BUYER I WOULD SAY AROUND $15.

BARTIROMO: MEREDITH, GOOD TO HAVE YOU ON THE PROGRAM.APPRECIATE IT. ALWAYS GREAT TO TALK TO YOU.MEREDITH WHITNEY JOINING US LIVE IN NEW YORK.




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