Superstar bank analyst Meredith Whitney predicted that unemployment will surpass 13 percent, causing severe woes for the banking industry over the next few years.
"Unemployment continues to drive higher and the banks are not prepared for double-digit unemployment," Whitney told CNBC.
"That's going to be an issue for them that doesn't go away for the next year-and-a-half."
While she has raised her short-term ratings for banks, helping their stocks gain this week, problems remain for the long term, she said.
The rise in joblessness and inability of consumers to obtain credit will show how important housing and lending have become to the economy, Whitney said.
"We underestimate how much the whole economy is dependent on the mortgage industry, and that has to change. This is what happens when you delay the inevitable. We're buying time here, but we're not restructuring the economy," she said.
Mortgage rule changes that prohibit mortgage investors from suing loan servicers will help banks in the short run, she said. But the progress may not last.
"It's a trading call," for the short term, she said of her ratings upgrades that include Goldman Sachs. “You don't want to be short these names."
Whitney’s fellow star bank analyst Dick Bove is optimistic for banks short-term and long-term.
“I think the banks will show ... a 300 to 500 percent increase in earnings over the next four to five years, because they've restructured their balance sheets,” he told Forbes.
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