Meredith Whitney Offers Up Some Bearish Comments On CNBC (GS)

Noted banking analyst Meredith Whitney appeared on CNBC this afternoon to talk to Maria Bartiromo. Whitney said that if financial reform passes, it will force major Wall Street institutions to contract their balance sheets significantly and will likely erode their business models.

She spoke in some detail about her outlook for Goldman Sachs (NYSE: GS) in the wake of the SEC's fraud charges against the firm. According to Whitney, the charges give ammunition to European governments to go after Goldman Sachs. She also said that this development provides an opening for smaller competitors to go after GS's market share.

Whitney believes that Goldman's stock price could fall into the $120s. She said that support for the shares is at book value which is in that range. She also stated that the fraud charges will make it difficult for the firm to "catch momentum," and that "momentum has been taken away from Goldman Sachs" which had emerged from the financial crisis with an improved competitive position.

Whitney believes that the banking sector as a whole is overvalued and said that it is difficult to support banking stocks at current levels.

She said that there is a bifurcation going on right now between the corporate recovery and the state of small business owners and consumers, who Whitney says are still hurting. In her words, there is "no revival on Main Street."