Meredith Whitney Strikes Again (BAC, C, JPM, WB, WFC)

Oppenheimer’s star banking analyst Meredith Whitney is out with another scathing note on major banks this morning despite the government bailout plan.  She slashed estimates on Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM), Wachovia Corp. (NYSE: WB) and Wells Fargo & Co. (NYSE: WFC) since their loss provisions will be much higher than what has been written off to date.

Whitney believes that the write downs will reach $104 billion in 2009compared with $64 billion written down to date.  She has also cutearnings estimates to under consensus estimates for all five companiesbased upon the expected increases in loan loss provisions.

She further notes little hope of any bailout plan improving corefundamentals in the near-term nor in the medium-term.  She alsobelieves that this will not have any real effect on housing prices which may head 25% lower.  Less liquidity inthe capital markets is to the tune of $2 trillion since the start ofthe credit crisis and tied to higher defaults and charge-offs.

So far this call is having little impact. Bank of America was upmarginally and Citigroup was down marginally.  But those hoping shewould quit beating this horse may have longer to wait. 

Jon C. Ogg
September 23, 2008