A Bid to Curb Profit Gambit as Banks Fall

[groovedaddy]

Traders who have sought to profit from the financial crisis by betting against bank stocks were attacked on two continents on Thursday.

The Securities and Exchange Commission is considering a temporary ban on short sales of some or all shares and an announcement could be made as early as Friday morning. Earlier Thursday, the S.E.C. scrambled to put together an emergency rule to force major investors to disclose their short sales daily.

In Britain, regulators announced new rules to bar short selling.

Short selling — a bet that a stock price will decline — is the practice of selling stock without owning it, hoping to buy it later at a lower price, and thus make a profit. It has often been blamed for forcing prices down in times of market stress, but the level of anger has intensified as the American government has been forced to bail out major financial institutions and the leaders of some investment banks have asked for action to protect their shares.

http://www.nytimes.com/2008/09/19/business/19backlash.html?_r=1&th&emc=th&oref=slogin

[lelgt60]

1. short sellers were not the problem...

At least not the cause of it. The banks made bad loans at high interest rates (read: high profits) because they believed the ever increasing pyramid scheme of increasing house prices would keep them afloat. When the scheme imploded, they had to own up to them. They're trying to pin it on anybody but themselves.