Banks aren’t prepared for a “double-dip” in housing, which “it looks like we are having,” Whitney said today on Bloomberg Radio’s “The Hays Advantage” with Kathleen Hays.
“They need higher capital,” said Whitney, chief executive officer of Meredith Whitney Advisory Group in New York, who started her firm after predicting Citigroup Inc.’s dividend cut in 2007.
Sales of new homes in July dropped to a record low and purchases of existing houses plunged 27 percent, the most in records going back four decades, according to reports from the Commerce Department and National Association of Realtors this week. U.S. home prices fell 1.6 percent in the second quarter from a year earlier, the Federal Housing Finance Agency said this week.
The housing market “has generally remained depressed,” with an “overhang” of foreclosed and vacant homes and “difficulties” getting mortgage financing, Federal Reserve Chairman Ben S. Bernanke said today in remarks to central bankers from around the world at the Kansas City Fed’s annual monetary symposium in Jackson Hole, Wyoming. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery.
Whitney predicted in May that home prices would fall when she participated in the Bloomberg Markets Global Hedge Fund and Investor Summit in New York.
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