By Daily Crux Editor Sean Goldsmith:

The latest round of superb earnings from banks was all a "Great Whitewash" according to analyst Meredith Whitney. Most of the earnings came from technical, one-time factors.

After the government announced it would buy agency paper from banks, the top 10 banks increased their holding in agency paper, only to write it up, and sell it to the government, banking huge gains. Banks also derived billions in earnings from changes in FASB accounting rules. But the fundamentals are deteriorating...

Banks are shrinking lending, so any losses will be magnified… and those losses are accelerating. They're also cutting available credit lines by hundreds of billions of dollars to reduce risk, but this will only further pressure the consumer, who looks at the credit card as a source of income.

In the video below, Whitney does a good job of explaining the banks' "blockbuster" quarter.

Watch the video...

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