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US banks could see worst credit for generations

The US banking system is to see the worst downturn in credit for generations, according to Oppenheimer & Co’s analyst Meredith Whitney.

Whitney forecasts that the worst profit margins since 1990 will be seen, there will be massive defaulting on a variety of loans and the most dire housing crash since the Great Depression.

Earlier, Whitney correctly painted the unpleasant portrait of Citigroup’s subprime woes, earning her a reputation as an accurate forecaster.

Across the US, housing prices are falling, a situation that has not occured since the Great Depression according to Whitney.

Consumer credit is another area of concern, and US bank stocks could slump by as much as 40%.

In a second negative Citigroup prediction, Whitney has stated that the bank must shed $100bn of assets to shore up its balance sheet.

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