Postcards

How the power players do it - by Fortune senior editor at large Patricia Sellers

Meredith Whitney on her 60 Minute warnings

December 21, 2010: 11:45 AM ET

by Patricia Sellers

Meredith WhitneyMeredith Whitney dropped a big lump of coal on municipal bond investors' holiday.

Sunday night, on 60 Minutes, the Wall Street analyst -- who warned early and famously in October 2007 that bank stocks would collapse, and soon they did -- blared her warning about the dire financial conditions of the U.S. states. Since her TV turn, Whitney told me this morning, she's been fielding lots of emails and calls, some congratulatory and others charging that she's overly worried and alarmist.

"I didn't put on that debt!" says Whitney, standing her ground that the 15 largest states, including California and New Jersey and Illinois, are wildly over-leveraged -- like the big banks were three years ago. This time, Whitney sees a similar level of investor complacency -- and another dreadful outcome. There may well be more than 100 municipal-bond defaults and restructurings in the next 12 months, she predicts. That, she adds, would cascade into hundreds of billions of dollars in investor losses.

Whitney's 600-page report on the state of the states is available only to clients of Meredith Whitney Advisory Group. But if you care to see the market-moving analyst, who is No. 38 on Fortune's Most Powerful Women list, on 60 Minutes, here's the segment, "State Budgets: Day of Reckoning" that is sure to add a tad more stress to your holiday season.

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About This Author
Pattie Sellers
Pattie Sellers
Senior Editor at Large, Fortune
Executive Director of MPW/Live Content, Time Inc.

Pattie Sellers has written more than 20 Fortune cover stories including "Marissa Mayer: Ready to Rumble at Yahoo," "Muhtar Kent's New Coke," "Oprah's Next Act", "The $100 Billion Woman" (Melinda Gates), and "Gone with the Wind" (Ted Turner). She co-founded Fortune Most Powerful Women and oversees the Fortune MPW Summit, the preeminent gathering of women leaders in business and beyond—and programs such as Fortune MPW Entrepreneurs and the Fortune-U.S. State Department Global Women Leaders Mentoring Partnership. Pattie also develops Live Content across Time Inc. Her blog, Postcards, is about how power players lead and navigate their careers. Pattie won Time Inc.'s prestigious MVP award for her performance in 2012.

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