Even if you didn't like the fiction of the SEC's ban on short selling, you still imagined it was trying to protect "financial stocks." Although a fantastic tale has been woven about the impact of short sellers, the definition of what exactly is a financial company seems to have grown in the telling.
Sure, you can understand the inclusion of Citigroup
In fact, Credit Suisse wasn't even originally included on the list; it had to request that its name be put on. In a bit of irony, Greenlight Capital
Now the SEC has shipped out responsibility for who should be on the protected list to the exchanges themselves. So rather than the original rationale of trying to stabilize our financial system by protecting banks and credit unions from the big, bad short sellers, we're basically saying to any company that if it wants to change its sector designation to "financial," all it needs to do is ask. Apparently anyone with even the most tangential relationship to finance can get included.
That's why we see not only Bank of New York Mellon
Yet not everyone thinks protection is necessary. Greenlight Capital recognized the absurdity of its inclusion and asked to be taken off, while Diamond Hill Investment Group begged off as well. American Physicians Capital also opted out, noting, "We believe in free and fair markets." That's a sentiment in short supply in Washington these days.
It wasn't the short sellers who brought the markets to their calamitous precipice, though their actions often did try to warn us. In the end, the SEC should simply follow Australia's lead and ban short selling altogether.
No, it won't help prevent the implosion of banks that took on far more risk than they should have, but then neither will the fairy tale that's currently being spun that these companies are somehow being protected. After all, Washington Mutual
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