America's banks need to sell their "crown jewels," as they bear the strain of the credit crisis and overextension of balance sheets, Oppenheimer & Co Managing Director Meredith Whitney wrote in the Financial Times.

"A clear lesson learnt from this credit crisis has been to sell and sell early," the prominent banking analyst wrote in an opinion column. "However, it appears as if US banks are setting out to make some of the same mistakes of the past 18 months all over again."

The belief that current prices were too distressed and did not reflect the true underlying value, cost Merrill Lynch and Citigroup Inc (C.N) more than half of their per share capital, she wrote.

"In the case of Lehman Brothers (LEHMQ.PK) and Bear Stearns, capital all but vaporized," Whitney wrote.

She noted US taxpayers became the default investors in banks as a result of the U.S. Treasury's Troubled Asset Relief Programme, which recapitalized the institutions.

"Why should the US taxpayer be forced to fund behavior that he or she would never have the luxury of indulging in," Whitney argued.

Whitney said that asset sales are certain to be heavily discounted just as initial bids for collateralized debt obligations and retail mortgage-backed securities were.

"While it is never pleasant to sell one's 'crown jewels', the strain of this credit crisis and the overextension of many bank balance sheets will require that they sell what they can and perhaps not what they would like," Whitney wrote.