John McFall, chairman of the Treasury Committee, has penned a letter to the FSA’s Hector Sants expressing his deep concern over “anecdotal evidence” that the monsters of Mayfair have been allowed to run amok on defenceless UK banks.
Hector Sants
Chief Executive
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
21 January 2009
Dear Hector
I am writing to you with respect to the Financial Services Authority’s recent announcement that it would allow the ban on short selling stocks in UK financial sector companies to lapse on Friday 16th January. At that stage, it was stated that the FSA “is prepared to reintroduce the ban without consultation if necessary”.
In the light of the extreme market turbulence in bank shares in the week since the ban was lifted, could you please confirm that the Financial Services Authority is actively monitoring the connection between the volatility in bank shares and the repeal of the ban on short selling. I am particularly concerned given that I have heard disturbing anecdotal evidence that some hedge funds have been shorting stocks in UK banks. To this end, could you also please confirm that you will not hesitate to re-introduce the ban if it is found that short selling has contributed to the undermining of stability in the banking sector.
As you may be aware, we are holding an evidence session with representatives from the hedge funds on Tuesday 27th January. Given the importance of this issue, I would be grateful for a reply before the hedge funds come to give oral evidence.
Kind regards
John McFall
ChairmanIn light of Mr McFall’s evident fondness for letter writing, FT Alphaville thought we would pen one of our own:
John McFall
Chairman
Treasury Committee
House of Commons
Committee Office
7 Millbank
London SW1P 3JA
21 January 2009
Dear John
In light of your recent letter to Hector Sants regarding your concerns over short selling, we invite you to read these recent posts on FT Alphaville, the site that supports our shorts (TM):
A Shortage of shorts
The Guardian blames Mayfair for Barclays rout
What’s rocking Barc?
If your concerns are more expressly about RBS, we do humbly suggest the recent poor performance of the bank’s shares might have something to do with your latest op/ed in the FT in which you argued, inter alia, for public ownership of both RBS and LloydsTSB.
Kind regards,
FT Alphaville