Gordon Brown warns City that short selling laws may become permanent
To more cries and cheers from the crowds Gordon Brown has today suggested that the new short selling laws could become law next year in a bid to reduce 'bear raids' on stocks and the circulation of false rumours. This is despite the fact that a group of power City fund managers are taking the FSA to court claiming that the recent short selling rules introduced to the markets amount to restriction of trade and are in fact illegal.
Whether the court case goes in favour of the fund managers or not we are treading down a very dangerous path as the authorities try to tighten their stranglehold on the 'free' markets. Short selling, in its legal form, has been part of market practice for many years and an often vital area of trade. It can and has highlighted problems with a number of companies, problems which were not of the shorters making.
Many people are over looking the fact that HBOS was in talks with Lloyds Bank well before last weeks deal as the company itself sensed there were problems ahead. The confusion caused by the short selling brought matters to the surface, matters which many believe shareholders should have been told - rather than the statement released with the FSA claiming the bank was fully funded.
It is now obvious that because of a tightening of the money markets the group would not have been able to refinance over £100 billion of loans due over the coming weeks and months - that was the real reason the bank nearly collapsed. In the end the City squeezed the truth out of the company but that has all been forgotten about in the vicious attack on City traders.
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