U.S. Credit Crisis Will Extend Into 2009, Oppenheimer Says

The U.S. credit crisis will extend into and even beyond 2009 as banks will write off more than $170 billion of additional reserves by the end of next year, according to Oppenheimer & Co. estimates.
``The real harrowing days of credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,'' analysts Meredith Whitney, Kaimon Chung and Joseph Mack wrote in a research note today.
The three lowered earnings estimates for the U.S. banking sector ``significantly'' due to ``strained liquidity resulting from shut down in the securitization market'' and on expectations that banks may take provisions of $88 billion in 2008 and $96 billion in 2009.
Banks and securities firms worldwide amassed almost $380 billion of writedowns and credit losses following the worst U.S. housing slump in a quarter century, according to data compiled by Bloomberg. At least $35 billion of additional writedowns included in their balance sheets weren't deducted from reported earnings, regulatory filings show.
Large U.S. banks have taken more than $73 billion in writedowns related to real estate securities investments and over $25 billion of reserves have been taken, Oppenheimer said.