'I Still Like BofA,' More Bank Lawsuits Likely: Whitney

Meredith Whitney's favorite big bank remains Bank of America, despite the firm's recent legal troubles regarding its mortgage practices.

'I Still Like BofA,' More Bank Lawsuits Likely: Whitney
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Federal prosecutors took aim at BofA on Wednesday for a mortgage loan scheme it had inherited from Countrywide Financial when it bought the company during the financial crisis.

Authorities said the scheme involved rapidly turning out mortgages without checking for wrongdoing, then selling them to Fannie Mae and Freddie Mac.

While the charges against Bank of America seem serious and prosecutors are looking for $1 billion from the company, Whitney said the bank remains in good shape and may even beat the case.

"I still like Bank of America," she said during an interview on CNBC's "Closing Bell" program. "It's cheap and I think they've got a lot of stability behind the company for the first time in a very long time."

In fact, Whitney said she spoke with BofA officials Wednesday and they assured her the case was not a major problem. (Read More: Bank of America Posts Profit)

"They think the case is meritless, based on the fact that five of the issues at point have been settled," she said. "One of the items is not worth pursuing (so) one out of seven claims are questionable."

Whitney said regulatory pressure is likely to result in a string of similar lawsuits against mortgage bankers.

"How many of these claims have merit and legs will be determined. I don't think this is unique to Bank of America," she said. "Everyone in mortgage disclosure should be prepared for these kinds of lawsuits."

Banks also should be ready for more layoffs, she said. (Read More: More Bank Layoffs Coming: 'Bad as I've Seen It': Whitney)

Bank of America alone expects to cut 16,000 positions by year's end, and other major institutions including Goldman Sachs and Deutsche Bank have similar plans.

"The only way banks will increase returns on assets and return on equity is if they streamline the business and get more profitable," Whitney said. "Banks have a lot of wood-chopping and a lot of expense management to do."