Fortune Magazine – Infinite Unknown

The star analyst tells Fortune magazine that housing woes will force banks to keep taking writedowns.

NEW YORK (Fortune) — The credit crisis is far from over, star analyst Meredith Whitney tells Fortune magazine in its upcoming issue.

Whitney, who audaciously – and correctly – predicted last October that Citigroup (C, Fortune 500) would have to cut its dividend, tells the magazine that banks in general today are still facing much bigger credit losses than what they’ve reported so far.

The Oppenheimer & Co. analyst warned last year – and continues to warn today – that the “incestuous” relationship between the banks and the credit-rating agencies during the real estate bubble will have a long-lasting impact on banks’ ability to recover.

THE BAILOUT BOYS: S.E.C. Chairman Christopher Cox (left) with Paulson, President Bush and Bernanke.

The big banks’ fear of big losses is threatening to bring down the entire system, with dire consequences for all of us. Here’s what’s going on, and what we can do about it.

(Fortune Magazine) — What in the world is going on here? Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they’re afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren’t financial professionals?

Okay, take a few breaths, pour yourself a beverage of your choice, and I’ll tell you what’s happening – and what I think is going to happen. Although I expect these problems will resolve themselves without a catastrophic meltdown, I’ll also tell you why I’m more nervous about the world financial system now than I’ve ever been in my 40 years of covering business and markets.

Star analyst: Credit crunch far from over

Chaos on Wall Street

THE BAILOUT BOYS: S.E.C. Chairman Christopher Cox (left) with Paulson, President Bush and Bernanke.

The big banks’ fear of big losses is threatening to bring down the entire system, with dire consequences for all of us. Here’s what’s going on, and what we can do about it.