Analysts at JP Morgan predicted that short sellers could be temporarily restricted. Concerned American financiers have sent letters to the SEC.
Industry participants contend that short sellers are causing investors to fear that the crisis will spread to more institutions. Analysts at JP Morgan noted that this argument could cause regulators to temporarily suspend short-selling activities.
Naomi Camper, chief policy officer of the ABA, remarked that certain share prices defy the underlying fundamentals.
Meanwhile, JP Morgan stressed this worry in its report. According to the banking behemoth, it has never witnessed a circumstance in which a “perfectly healthy bank” ended up in the hands of the FDIC within a brief period of time.
The financiers further noted that the pressure affected even banks with strong financial positions, as an increasing number of Americans are now concerned about their savings in these institutions.
Short-sellers seem to be reaping huge gains as three big regional banks with $532 billion in assets have already collapsed. Ortex, a data firm, reported that sellers profited $1.2 billion by wagering against these struggling equities.
On May 4, short sellers of First Horizon, PacWest, and Western Alliance shares reportedly earned $379 million.
According to the survey, the majority of Americans have moderate or high confidence in their bank’s stability and the security of their deposits.
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