Chris Whalen of Institutional Risk Analytics provided some recent clarity on the foreclosure crisis and its impact on the banking sector. Whalen believes the foreclosure crisis merely proves that the credit crisis never ended and that the government “bought time” for the banks. That time is now running out and the banks simply do not have the capital, the earnings or the capability to absorb the losses in the pipeline from the continuing foreclosures. Ultimately, Whalen believes restructurings are likely to occur in 2011 as the U.S. government is finally forced to deal with the banking sector as it should have in 2009.
For more from Chris Whalen see his recent must see presentation at AEI.