Meredith Whitney’s calamitous predictions for municipal debt haven’t yet been fulfilled.
A decade after the financial crisis, The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight economist Nouriel Roubini and analyst Meredith Whitney.
Ten years ago, she was one of Wall Street’s best-known analysts, credited with foreseeing the calamity that would lay waste to some of the nation’s biggest banks.
Now old phone numbers have been disconnected. Emails go unanswered. Calls to her former attorney and a Bermuda rugby pal of her husband, a retired professional wrestler, elicit no response from her. Finally, an email to Donald Watson, an executive vice president of finance for her current employer, Bermuda-based insurer Arch Capital Group Ltd., elicits a terse, “Meredith is aware of your inquiry, but prefers not to comment for your story.”
Ms. Whitney, 48 years old, catapulted to fame after her prescient October 2007 report on Citigroup Inc. But the accolades turned to unmistakable schadenfreude following her 2010 interview on “60 Minutes,” in which she predicted an as-yet-unrealized meltdown in municipal bonds. After her interview, the Bloomberg Barclays Municipal Bond Total Return Index fell 2% in a single month.
“The attention she got carried a lot of weight,” said Howard Cure, director of municipal-bond research at Evercore Wealth Management. “But I think the municipal bond market was a lot more resilient than she thought.”
Before publishing her bearish analysis of Citigroup on Oct. 31, 2007, Ms. Whitney was a little-known Wall Street analyst who had begun her career on Wall Street after earning a bachelor’s degree in history from Brown University in 1992.
“By the end of the trading day, a woman whom basically no one had ever heard of, and who could have been dismissed as a nobody, had shaved 8% off the shares of Citigroup and $390 billion off the value of the U.S. stock market,” author Michael Lewis later wrote it the “The Big Short,” his chronicle of the financial crisis.
Citigroup’s then-Chief Executive Charles Prince resigned within days, and Citigroup later slashed its dividend.
Citigroup’s then-Chief Executive Charles Prince resigned days after Ms. Whitney’s analysis.
Ms. Whitney was on the cover of Fortune magazine, hailed by Forbes as one of the most powerful women on Wall Street and voted “Power Player of the Year” in a 2008 CNBC survey.
She left Oppenheimer & Co. in 2009 to start an eponymous consulting and research firm, but closed it in 2013. A short-lived hedge fund followed, but the fund lost money and closed in 2015 amid a legal dispute with its anchor investor.
“This whole experience has been highly unfortunate, and I’m putting it behind me,” Ms. Whitney said in a 2015 interview on Fox Business Network.
Ms. Whitney and former Fed governor Kevin Warsh in 2011.
In late 2015, she joined Arch Capital Group. She is still there, a senior vice president within the firm’s investment management group, managing about $1 billion in equity holdings, Mr. Watson said in an email.
And though her calamitous predictions for municipal debt haven’t yet been fulfilled, the defaults of Detroit and Puerto Rico have offered some vindication. Her name is still invoked whenever local debt looks shaky.
“To be fair to her, the economy has been strong,” said Mr. Cure. “We’ll see in the next recession how prepared, or ill-prepared, certain areas of the country are.”
August 2007 marked the beginning of worst financial crisis since the great depression. A decade later, WSJ's finance and banking editors break down the events that led to the 2008 financial crisis. Photo: Associated Press