Here we go again. It remains unthinkable that Wall Street even considered giving themselves executive bonuses (they did pay out healthy bonuses to employees, even if they were 50% less than the year before) when they have to know that the future remains delicate for their industry.
U.S. banks will have to raise fresh capital in 2009, and a sharp increase in credit-rating downgrades on mortgage-related securities will lead to further stresses on the companies' capital, according to prominent banking analyst Meredith Whitney.
"From July 2007 to date, over $5 trillion worth of securities have been downgraded, but our concern here is that the pace of downgrades has only accelerated through 2008," the Oppenheimer analyst wrote in a research note dated Jan. 6.
"Capital ratios will be meaningfully lower in the fourth quarter (of 2008) versus post TARP pro forma levels," she said.
Since the summer of 2007, Wall Street has been hammered by a sharp pullback in debt markets, which began with mortgage woes and escalated into a credit crisis, slowing economic activity around the world.
