By Jeff Kearns
Aug. 13 (Bloomberg) -- The credit crisis is ``broad, deep, and global'' and ``far from over'' for financial companies even after they reported $500 billion in writedowns and credit losses, Merrill Lynch & Co.'s chief investment strategist said.
``Investors are significantly underestimating both the scope and the extent of the credit bubble and the consequences of its subsequent deflation,'' Richard Bernstein wrote in a note to clients. ``The problems are not confined to large institutions that are overexposed to U.S. subprime loans.''
The lingering effects of the crisis mean banks and brokerages need ``massive'' consolidation because of the glut of lending worldwide, Bernstein said.
Profit for U.S. banks and brokerages tumbled 94 percent in the second quarter from a year earlier, according to Bloomberg data. Financial stocks in the Standard & Poor's 500 Index have tumbled 28 percent this year for the worst performance among 10 industry groups.
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
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“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.”
– Abraham Lincoln, speech to Illinois legislature, January 1837
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