After a disastrous few days for UK banking stocks, the head of the Fianancial Services Authority, Lord Turner, today alluded to a possible reintroduction of the shorting ban on financials. Quite frankly, a reinstatement of the ban is something I'd like to see happen sooner rather than later.
Letting the ban expire last Friday seems rather irresponsible given the news of the bailout that broke on Monday – news of which the government must have had an inkling. And after the Royal Bank of Scotland (RBS) trading statement, which dropped the bombshell that full-year losses at the bank could reach as much as £28 bn ($40 bn), we knew there'd be a fair bit of volatility. Add in the very real threat of nationalization and you've got a riot.
Letting the shorting ban expire ahead of a bailout - and as RBS teeters precariously on the brink of nationalization - seems somewhat counterintuitive, to say the least.
Deputy international editor