TORONTO - The U.S. banking sector is headed for a credit downturn that will be "the worst in generations," featuring widespread defaults on a range of debts and a national housing price slide not seen since the Great Depression, one of the most influential analysts on Wall Street says.
The banks face massive loan losses - "far more dramatic" than most bank executives and ratings agencies have forecast - as the next chapter in financial-sector turmoil unfolds, said Meredith Whitney, an analyst with Oppenheimer &Co. Inc.
"We believe loss rates will exceed the highest levels since 1990 by a significant margin," she said in a note Monday.

"Bank losses will be the highest in the past 20-plus years as a result of greater numbers of individual defaulting on mortgages and/or other loans and from [loan balances that] are far higher than they were in the last housing cycle."
Whitney - who is also a panellist for Fox News and the No. 2-ranked analyst on a Forbes list of top stock pickers for 2007 - shot to global infamy last year after her gloomy, but accurate, predictions about the scale of subprime problems facing Citigroup Inc. led to a worldwide sell-off of banking stocks.

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