Meredith Whitney Calling "BS" On The Banks

Real Estate Broker/Owner

Banking analyst Meredith Whitneyduring a CNBC interview continues to call "bs" on the banking system, "The government enabled the banks to have better than expected first quarter earnings." 

While not directly naming names, one can only think that Whitney is referring to the earnings reports of Bank of America and Wells Fargo both of whom were beneficiaries of Wall St.'s quiet bailout.

Not surprisingly, Whitney goes on to say, "The underlying core earnings power of these banks is negligible."  In other words, it is unsustainable.  And yet here Wall St. is rallying proving once again that the stock market is no longer an economic, banking, or housing indicator.

Additionally Whitney predicts that despite the recent stress test, the banks will still have insufficient capital reserves in order to remain solvent, "I don't think this is the last time a lot of these banks raise money".

Comments (6)

Terry Ravlin
Corvallis, OR

And the banks just sit on the money they get. Their behaviour borders on the criminal, in my opinion.

May 11, 2009 11:12 AM
Mark MacKenzie
Phoenix, AZ

Terry:  I agree with you.  The bigger problem is that the government is involved.  Failed banks are being kept alive with tax-payer money in the form of "loans" and guarantees.  It is making for a frustrating policy.

May 11, 2009 11:19 AM
John Mulkey - Waleska, GA
Housing Guru

Mark - I just heard Bernanke speaking and he has assured us that the "stress tests" accurately reflect the condition of the major banks, and that everything is okay. No need to worry : )

May 11, 2009 12:02 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

I agree with Terry, they are hording $$$.

May 11, 2009 12:08 PM
Mark MacKenzie
Phoenix, AZ

John:  I am so glad to hear about Bernanke saying that.  I will indeed sleep much better tonight. :)

May 11, 2009 12:15 PM
Kevin Robinson
Twin Falls, ID
Fractional Developer

Boy. I was worried. Now that Bernanke spoke I can relax as well. Whew.

May 12, 2009 01:48 AM