Sharp increase in short interest for financial stocks

Surely most of the real estate related problems have been identified now. The lenders need to assist the borrowers that want to pay their payments but the increased interest rates have resulted in possible foreclosures. Its better to lower their interest rates to a managable rate to avoid furhter losses in the loan principal. I hope the lenders don't wait too late to assist in this recovery of assets.

Why is it everyone is overlooking Wall Street and Congress as root causes in this housing debacle? Was it not true that the lenders were motivated to produce more and more loans without concern with whether or not they could be repaid by marginal borrowers as they clamored for by Wall Street who packaged them into bonds for resale in a then-hot bond market? And was it not Congress who pushed equal opportunity legislation which made sure that lenders would not reject poorer minority candidates from getting loans, many of whom are now failing to make the payments? Granted the "teaser rates" were unreasonable", but the real capital loss was not suffered by people who will abondon that which they could never afford in the first place.

The shorts are making a strong bet that many of the banks will cut their dividends, at least in part. Although the problems are not pretty, they are infact fairly well diffused. For example, C is facing a large write off on the one hand, but it is loaded with capital and resources on the other. It seems highly doubtful that new incoming leadership into C will cut the dividend at all. Their really does not seem to be the need and the wrath of the stockholders could be enormous. Much of the same would be true for WB, etc.

A Dividend cut is a good thing . Last time WB cut its dividend the stock rose 10%