The banking and credit crises so far have just been the tip of the iceberg, warns former Clinton White House economist Nouriel Roubini.
"A systemic banking crisis will go on for awhile, with hundreds of banks going belly up," Roubini says
He estimates the financial crisis will lead to credit losses of at least $1 trillion and most likely will be closer to $2 trillion.
"At this point, $1 trillion isn't a ceiling, it's a floor," says Roubini.
In an interview with Barron's, Roubini said bank losses are climbing because they have only written down their subprime loans so far.
They haven't even begun writing down most of their consumer-credit losses, and reserves for those losses are much less than they should have been.
"The banks are playing all sorts of accounting gimmicks not to recognize them," he says.
"There are hundreds of millions of dollars outstanding in home-equity loans that eventually could be worth zero, too."
Roubini gives Federal Reserve Chairman Ben Bernanke poor marks for his handling of the crisis so far. He says the damage was actually done earlier, when the Alan Greenspan Fed lowered interest rates in 2001 following the dot-com bust, and then kept them too low for too long.
Also, Roubini says, the Fed and other regulators took a "reckless" approach to regulating the financial sector.
"The paradox is they're going to the opposite pole now. They are overregulating, bailing out the troubled participants and intervening in every market."
"The regulators should investigate themselves for bailing out Fannie Mae and Freddie Mac, the creditors of Bear Stearns and the financial system with new lending facilities."
"It is privatizing the gains and profits, and socializing the losses, as usual. This is socialism for Wall Street and the rich."
The American taxpayer is going to have to foot the bill, which Roubini says is going to be "huge."
© 2017 Newsmax. All rights reserved.