There is chatter about a short selling ban on bank stocks

Dunno, ask Robinhood.

I've said it once and I'll say it again. These greedy MFers would crash the economy to make a penny.

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These greedy MFers would crash the economy to make a penny.

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Short sellers are the only forced buyers. By banning it, liquidity dries up and exacerbates the problem. It's just talking points the government cooks up to sounds like they are doing something, ignoring history yet again...

From the NY Fed:

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In 2008, U.S. regulators banned the short-selling of financial stocks, fearing that the practice was helping to drive the steep drop in stock prices during the crisis. However, a new look at the effects of such restrictions challenges the notion that short sales exacerbate market downturns in this way. The 2008 ban on short sales failed to slow the decline in the price of financial stocks; in fact, prices fell markedly over the two weeks in which the ban was in effect and stabilized once it was lifted. Similarly, following the downgrade of the U.S. sovereign credit rating in 2011—another notable period of market stress—stocks subject to short-selling restrictions performed worse than stocks free of such restraints.

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These banks failed at duration risk and being called out for it - shorts are not the problem.

Bank management purchasing long dated treasuries in hopes of squeezing out a few more basis points during the lowest interest rates environment in the history of the English speaking language…..well, those bank managers should be fired and their stockholders should feel the pain.

A market without shorts is far worse than with - you can go back to 2008 and see the problems.

Yes in 08. They can just not allow short trading. I seem to remember the volatility was extremely high at the time and spiked before they announced it. They announced it after hours and trading in the financials sector in the morning went wild with traders buying to close out their short positions. I happened to have a bunch of calls in that sectors, I think in the financial ETF. It was the craziest trading I’ve seen in the options market and participated in. I had options going for 100x+ what I bought them for.