Jamie Dimon says short-sellers on social media are to blame for banking crisis

Joining us tonight, Empire Financial Research Editor, Herb Greenberg, New York Post Business Reporter, Lydia Moynihan-Herb. You know, every time there's a call to ban shorts or to go after shorts for this or that, I just think it's never worked, but does Jamie Dimon have a point? I don't know what Jamie's talking about. He's a smart guy. I really like him. I think he's misguided here unless he knows something. And if you look very carefully, he's saying if they were doing something wrong, obviously short sellers were early in pointing out the problems in SVB and Silvergate. I think short sellers are always the easy populist scapegoat.

There's actually something else, and I consider it the story nobody's talking about that actually could be having a greater impact on this, Brian, not the short sellers, but it actually could be just that you have these somewhat illiquid stocks, that's the regional banks, many of the regional banks, of 100 and some odd, 143, 145, inside a very liquid vehicle, that's the ETF, the regional bank ETF, the carry is it's often called. And I think that aspect of it, for people who really understand the way the inner workings, the complex, the not easy explanation, is really what we go beyond here because those ETFs, because of the way ETFs are created, they could end up any selling there. That can cause this exaggerated result that we see in many of these smaller names. Lydia, your take? I mean, I don't think Jamie Dimon is an unbiased observer, obviously he wants bank stocks to remain high, any volatility in a regional bank, often affects larger bank prices, so he wants things to be as stable as possible. And I think what he's talking about here is basically just making sure that the SEC is not asleep at the wheel, he's talking about collusion, that's something that SEC is always gonna be monitoring. These are things that SEC is always keeping eye on various stock trading activity that doesn't actually mean that short sellers are doing anything wrong. So I think there's a few things going on here, obviously the SEC needs to be doing its job of enforcement, but it doesn't mean that somebody who's just paying attention to what's going on and looking at kind of reading the tea leaves is necessarily to blame for this whole situation.

Well, I think Herb that, again, I can't speak for Jamie Dimon, Jamie you're welcome to call in the show, you still owe me lunch from a bet we made 10 years ago by the way, which is using social media as well. I don't think it's just the act of short selling Herb, I think it's shorting the stock and then using social media to spread your message. I think that's more of a beef. Assuming it's manipulative and it's wrong and intentionally wrong, don't forget, there were short sellers who were raising red flags about SVB months, months before the bank failed. Yes, Bill Martin, my friend, Bill Martin of Raging Capital. Bill Martin and several others were out there, he was probably the most, he was the loudest, but plenty of a few of them were out there. So where do you draw the line? You draw the line that's intentionally misleading and then that perhaps becomes manipulative.

Yeah, well, we'll see where this goes. I mean, I guess Lydia, if we get another couple bank failures, maybe the government actually maybe starts to raise or wave the red flag a little bit more. You say that so casually, just a few more bank failures. Another day in the life here at CNBC. Yeah, I also wanna address too, cause one of the topics of conversation that's come up in recent days is whether there should be a halting of short selling on banks, which I think, anytime there's a problem, there's a bias to action. People want something to change and that makes sense. We don't want more bank failures.

And yet I think you look at some of the solutions that people are talking about, for instance, halting those short sales of the bank stocks. We've tried that before, it was not effective. Back in 2008 when we implemented that, that didn't help at all. Bank stocks continued to drip dramatically. It sends a signal to the market that regulators have to step in and that doesn't assuage anybody. It signals that basically they're holding it all together with a lick and a prayer and some safety pins. And that's not a comforting market.

So it's messy, but that's the stock market. That is, and Jamie is taking, getting a lot of deposits from First Republic, but he probably just doesn't wanna have to be the quote, hero every time here.

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