Graham in Oxford has overlooked one thing. Any financial institution that deals extensively in home mortgages is always insolvent in the strict sense of the word simply because they lend long and borrow short. The only way they can survive to do the essential task of lending money to people to buy homes is to have some form of back up for their permanent insolvency and that is the Government. What is wrong is not that the Government has had to bail these institutions out but that they let these institutions directors and senior magament run that in a reckles manner and at the same time take huge salaries and bonuses for creating paper profits that later vanished. This situation is even worse in the USA that the UK

Paul Hutchinson, Calabasas, California USA

The rumours were true. Many of these banks are only still solvent because of unprecedented governmental assistance (i.e. corporate welfare that taxpayers are funding).

Here is the chain of events:-

1) Many large banks make ridiculously imprudent loans to people with little chance of paying them back if interest rates move just a little higher.

2) People start defaulting on the loans.

3) Astute traders notice the problem and start betting that the stocks will fall. They talk amongst themselves about why this is the case (why does anybody think this is a crime? is your grasp of economics really so poor that you think stock prices are meant to always go up even when a business is in financial trouble largely of its own making?)

4) Frightened politicians and officials start handing over our money to prop these companies up and start barking 'how dare you say things about the solvency of these companies, of course everything's fine, arrest anybody who says otherwise!'

We're not fooled

Graham, Oxford, UK

Today I had my house repossessed, it was mortgaged with HBOS, when the government bails them out will it bail me out.

Paul, bath, uk

Short selling shares should be illegal. It can only damage the interests of the shareholders.
Stock should only be able to be loaned with the explicit agreement of the beneficial owners.
This is so obvious, I cannot understand why we shareholders and pension payers put up with it.
Oh yes, the big institutions that have the ear of the government and regulators make a packet from shorting and loaning. That will be it..

NicD, London,

can you spread rumours legally to push the share price up? Let's hope no politicians sold Nothern Rock or HBOS shares before their bad news.

tony, LEEDS, uk

All this discussion about capitalism - ha!

The system we have today is nothing like capitalism. More like interventionism - do what you like then turn around and ask for a gov bailout when you gamble wrong.

In true capitalism everyone would know there is no bailout so people would be more aware of the risks - especially shareholders. There would also be no fractional reserve banking, just money 100% backed by gold - which would stop credit getting out of hand in the first place..... ie the conditions that gave price stability for a few hundred years until the central banks were created.

Adam, London, UK

Is there any suggestion that there is terrorist activity behind this type of event? It seems to me that destabilising the western financial system is a more destructive attack on "Western Civilization" than crashing airliners into buildings.

Richard Weekes, Ullapool, UK

This practice of scaremongering for profit in world financial markets has been getting honed, perfected and legitimised ever since Rothschild did this with such great success following the battle of Waterloo.
His and a small number of other families ended up in control of at least half the worlds wealth within a few decades following his scaremongering tactics.
The people who now run the financial systems cannot pass on the current opportunities, financial systems have been designed with this kind of opportunistic advantage in mind.
The risk we all face now is that the immediacy of the causes and effects we see may lead to loosing our collective belief in money. If that change in our psyche is not managed with care, we will be part of and witness an unprecedented worldwide human catastrophe. The winners will as ever be the money-changers, currently manipulating the systems exactly as designed and intended for their own selfish purposes.

Jim Ballantyne, Sandhurst, Berkshire

The FSA need to stamp heavily on this practice before the reputation of the LSE is shot to pieces. Creditable rumours of this kind can only emanate from a limited number of sources so the LSE can and should prosecute those responsible, and quickly.

Oxford Don, Oxford, UK

Who is being held accountable? These people are like children who don't get punished for their actions, only threatened with punishment. They have found that they can do what they want without having to pay for their actions. WE are letting them get away with stealing OUR homes. When are WE going to stand up and demand justice.

Sammi, L.A., Cali

The current bail out of the Sub Prime lenders and Investment banks is the greatest swindle in world history. While the scions of Investment banking in Wall St and London split up multi billion pound/dollar bonuses year after year, and then get in trouble due to their pillaging the mortgage market, turn to the Fed and BOE for the bail out funds, it is criminal.
The Fed continues it's 100 year embezzlement from the American people by sending a helicoptor pilot from the University of PA to spread paper to the wind in hopes of preventing what has been caused by doing exactly just that. The American people having been dumbed down over the last 40 years is too entangled in their own silliness to even take note. Greenspan was a pied piper con man and Bernanke is a swindler.
Every single dollar paid in bonuses since 2001 should be repatriated from all the top executives at all the Investment Banks and Martgage Cos and any other swindlers who profited.

Peter Courtenay Stephens, Gloucester, U.S.A. VA

here we go again ,lets play give us a clue ? who were they employed by` prior to becoming F.S.A directors .
the winner gets a directorship with patsy hewitt at BT .

Robert J Fox, norwich Norfolk,

Stop the practice of stock lending and and make it illegal for traders to sell something they don't own (i.e shorting) and the problem will be solved immediately.
Selling something that you do not own is immoral and should be illegal.
When will the regulators take some real actions to regulate the vice den that is the stock market?

James P Blyth Currie, London, UK

Another scam? Well as far as I know the traders are banks employees.
So I guess the banks are making a big profit, while the share holders, probably private entities, advised by the bank to invest in shares, are loosing their money.
That just sounds like what has been happening all along.

lauren, London, Uk

this can only happen when market conditions create this level of anxiety. stockmarkets are governed by greed and fear.
when can a short term trader be considered honest.dis honest or a real crook when all the time he is dealing in something he doesnt own ie the actual shares themselves.
it is no good the great and the good moaning when there are no rules to stop this type of trading.
if there was aproblem withHBOS we would all have to lend them a lot more than we have lent or given northern rock.

rod smith, manchester, england

This unfortunate event highlights the need for some legislation to control what can be legitimately said about a Financial Institution. That said, I don't think it will happen.

Which leads to a more serious observation. If terrorists can put together a serious plan to destroy to sky scrapers in New York, then they can learn about financial markets, and bring down banks and financial instutions.

First the building the housed the financial institutions, then the financial instution itself. This is very serious.

GrXray, Caledonia , Michigan USA

If these traders are found then the simple way of dealing with them is to strip them of all their assets right down to their final penny, that would ensure no-one tried it again.

Stephen, St. Ives, England

Capitalism ≠ The Free Market.

A free market requires "many buyers and many sellers". Capitalism is about the elimination of selling competitors and the enslavement, if you will, of the buyers. In other words, capitalism tends to monoploy.

Capitalism is also subject to meddling and intereference from leverage points in government and banking, because large organizations control massive amounts of, well, capital!

Free markets reduce and mitigate powerplays and a fair equilibrium is reached with the buyers.

We live under Capitalism and it is not good.

Joseph Ames, Philadelphia, USA

Trading in commodities has been going on for thousands of years. That is how the silk road helped Asian producers and they used camel trains to ship the markets in the middle east where the Europeans came to buy. Anyone would be stupid if they thought that no one "talked up the price" on any one product over all this time. When i was in school 4 decades ago, a vulture was a huge bird, now the vultures have 2 legs, smoke cigars and lie to make the most money in the quickest amount of time. Does the term "buyer beware" seem more familiar these days?

MARK SMYTH, TORONTO, CANADA

The government and the authorities are being less than truthful. If there was nothing to worry about, a few speculators could not bring down an institution like HBOS. Indeed 2 sizeable ‘banks’ would have gone bust already if not for massive government support which will be paid for through higher taxes The cause of Northern Rock and Bear Stearns ruin was utterly reckless lending polices, tacitly approved by the regulators. The banking system is perilously close to collapse and the authorities know it. The financial markets are oiled by rumour and speculation. Palatable or not, the speculators are doing a service by rooting out the weak. Does anybody really think HBOS could care less about its depositors? The answer is no; they care about making money, just like the speculators who are being vilified. Do you think they are being altruistic by offering a higher rate of interest? Put is this way; the only way to offer a higher rate of interest is by doing something riskier.

Richard, London,

1929 again! But much bigger! ...With bigger consequences! Bet on a run up to WW human being extermination all triggered by greed and political complicity/complacency!... on a global basis!...and the longer we wait, the worst the downfall!

Antoine, London, UK

I have no problem with these "speculators" making money from rumours. What I can't stand is that when they bet the wrong way the central bank then steps in and bales them out. Clever eh?
The more you give them the more they spend.!

Steve, Singapore,

History repeats itself - read 'A Very English Deceit ' by Malcolm Balen. The South Sea Bubble Scam - the first great financial scandal.

Nothing changes where greed is involved. Unfortunately too many people with vested interests are feeding from the same trough.

philip, Andover, England

Willie Sutton, an infamous bank robber, once stated, he robbed banks because "that’s where the money is", a reasonable, if somewhat distressing assumption. Now in the international trading arena, it is easier. If enough traders can convince the market that any company or bank is in trouble, they can destroy their target and make a killing, irrespective of the validity of their libel. A few hedge fund traders like George Soros,Edward Lambert, Steve Cohen, James Simons, to name a few earn themselves in excess of 1.5 billion dollars a year. Think about that figure for one human being, for one year and attempt to justify it on any rational level. It is wrong that we are in an era where individuals can destroy companies, banks or the currency of a country, whenever they want to because they can. Newspapers hardly address this subject, but comment on the obscenity of the salary of say Lloyd Blankfien of .Goldman Sachs, circa $70,000,000 a year. Something has gone terribly wrong with the free market philosophy.

Keith Pirelli, Rio De Janeiro, Brazil

Capitalism appears to be working beautifully, to my mind !

The whole point about the so called "markets" is that one chooses to do something based on ones own viewpoint at any given point in time.

I'm afraid to shock people here but there is no way to value anything other than what people choose to pay for it. As is proved everytime you place a bet (yes, "a bet") on the stock market.

If people wish to change their opinion based on rumours then they are free to do so; whether they be good rumours or bad rumours. If anyone truly believes that a company has changed their ACTUAL value within ten minutes then they are fools. However, this is exactly what the "markets" are based on - random speculation based on incomplete knowledge at any given point in time.

When investing in any system run by humam beings who have half knowledge, strong opinions, money to burn and no other job then - Good luck, you'll need it !

John, Southampton, UK

Alistairs Solicitors, South West, UK

Just goes to show how little regard there is for those whose hard earned money is held in these institutions. If you find this action acceptable, then I wonder about the integrity of teh service YOU offer!

Ron, Milton Keynes, Bucks

Gold is money. Silver is money. Paper, backed only by a government gun and empty promises, is NOT money.
Take this for what it is worth.

Michael Spears, Charlottesville, VA

These low life seek to make a profit from this dishonesty at the expense of each and every one of us. The kind of potential damage this could have ( and still may ) inflict on interest rates would affect adversely anybody with a mortgage, Could potentially decellerate and already slowing economy and have far reaching and long lasting effects on the whole of the UK. It is nothing short of TERRORISM.

Pete Smith, Wirral,

Do what the U.S. refuses to do because of the relationship between power and money--oh, it's the same in England? Well then forget it!

Or investigate, arrest, prosecute and jail (for a good long time)
the perpetrators of this scam. They deserve it. This is not the way capitalism is supposed to work.

MikeinOhio, Ohio, USA

As a pensioner, I view these rumours being spread about
HBOS with alarm. Maybe these people don't realise or even care that they are playing with peoples lives. It is difficult enough trying to manage on the state pension (just increased by 3.4%) without having the worry of seeing our very small investment dwindling away to almost nothing. All I can do is sit tight and hope and pray that some sanity will return to the turbulent financial world. I do hope that some of these rumour mongers wil read these comments and perhaps think of the consequences of their actions.

Paul Snape. Fleet.

Paul Snape, Fleet, Hampshire

Was this really a one-off case of "malicious traders" or just The City doing their usual thing - though in this case they targeted one of their own and so all of a sudden it's not cricket?

If, say, a retailer, a house builder, a tech stock or a pharmaceutical company had plummeted based on some bank's "market analyst" nonsense or gossip doing the rounds do you think they'd be able to kick up such a hoo-hah and expect a regulator to step in like The Mighty Oz and declare "pay no attention to the rumor-mongering short-sellers behind the curtain who are screwing us all"?

Maybe The City should be prepared to die as well as live by it's own rules and creations, rather than happily squeeze the pips out the rest of the country but go crying to Merv and The FSA when what goes around comes around.

Andy, Edinburgh,

Unfortunately this is the type of greedy attitude that has caused the problem in the first place. This is how the City and the financial markets work. No big surprise really...

Phil, London, UK

I'm going to get my cash out of HBOS, before i loose it.

S Wright, Manchester,

Paul Francis.

Capitalism WAS meant to work this way. Capitalism is the market. The perfect market requires that there is no regulation to anything that is done within it so that the most market efficient result is reached. If that involves shorting and rumour mongering then so be it. Look at the small banks that collapsed in the 18th and 19th Centuries and were bought up by more market efficient larger ones... And the next scene gentleman and ladies?

Alistairs Solicitors, South West, UK

There is such a lack a confidence with anything to do with mortgages that even the most rational and informed of people can be influenced. The underlying issue is that we are collectively starting to believe that property prices in many countries are overpriced and that companies with exposure to the property market will be subject to losses and hence reduced profits.

Costas, Cyprus,

It would appear the reglators approach to managing the markets and their partiicpants lag the advantages that technological advances give the participants. The speed and reach of the technology and communcations systems seem to far outstrip the controls and reaction times of the regulators. Time to make some significant changes.

Chris Claridge, Singapore,

Perhaps these traders have mobile phones?

Chris Claridge, Singapore,

<<Muslims are short selling western banks, they don't need plane bombs any more>>

Actually, the trading departments of many major banks (who employ people from al nationalities and religious persuasions) are doing quite a good job of bringing down the system and have been doing so for many years.

A reading of the works of Nassim Taleb (The Blacks Swan) or Satyajit Das (Traders Guns & Money) would clear up your thinking - if you understand maths that is.

Alfred, Ryde, Isle of Wight

Halifax doesn't need Stock Market manipulators to bring them down. Their very poor customer service will do that for them !

Norman Pitkin, London, UK

There appears to be considerable naivety and 'laissez-faire' attitude at the BoE, LSE, FSA and other leading financial institutions in the UK.

Seeing a 17% drop in HBoS share price in minutes, when it had been up about 3% at the open, should have rang alarm bells at the BoE and LSE. Why wasn't trading suspended, pending announcements? Why did the BoE take an hour to pull its finger out? How the hell is the FSA going to find the culprits who orchestrated this fraud?

The only decent thing to do is to cancel all trades yesterday relating to banks. This way no-one profits and no-one loses. The FSA then should look at the large trades conducted and see if these are unusual for the trader(s) in question.

Paul, Hong Kong,

Unless the FSA can listen to mobile and domestic phones and see text messages form all realted famiy they are wasting they are once again huffing with no puff.
Short seling has been going on for too long and only when a big name is involved does anyone say anything,
If there is intrinsic value in the banks they return to their previous levels.
But that is sbjetc to them coming clean about their off balance sheet exposures. The don't need the Bank of England at all. What they do need is to cancel all declared bonus payments and offer deep discounted rights for new shares. If they come clean they will be fully rewarded if not heaven help us all.

Robert D Marshall, London, UK

The FSA shows no consistency here. Where was their concern when banks were building up assets that were priced to models rather than markets? Where was their concern when bank shares were rising based on speculation rather than fundamentals?

The truth is that the FSA is now not primarily concerned with fair trading, but rather protecting banks, because it got its hands burnt with the Northern Rock debacle.

By protecting banks now the FSA is prolonging all our agony and delaying even further the time when banks will be able to price their assets to market once more.

Guy Smith, Bexley, UK

I just bought £20,000 pounds of shares in HBOS.

Ray Gill, Esher, England

This looks like more incompetence from the FSA. This regulator has to act to find these people and do it now. This is a multi million pound "robbery" at our expense. They really need to put this fireout now. I for one will be moving my money today.

Bob Taylor, castelnau, France

I'm in the Halifax - whoops !!!

Ian Payne, WALSALL,

I have no position in HBOS. However, if HBOS is in such a strong position, how come it needed to borrow £750 million at 9.5%? This is not a malicious rumour, it is what HBOS did. Why would a bank borrow at a penal rate, from which it will be very difficult, if not impossible to make a decent profit, if it is not desperate for cash? Bear Stearns was saying it was safe in the middle of last week...

Mike, London,

The whole issue of short selling need to be investigated. Who would knowingly lend their stock to someone else who's intent is to reduce the stock price and therefore the value of the asset you are lending? Are shareholders unknowingly allowing their stock to be lent out?

M Jeffs, Bucks, UK

Imran, I believe you need to spend more time understanding Syariah finance before stating "i am a muslim in the uk who trades stocks and cfds and spreadbetting" Visit the mosque and ask the Iman for guidance

Farooq, Singapore, Singapore

The underlying problem here is still the perceived lack of transparency and governance in the financial sector. If investors become accustomed to banks withholding critical information from the market, what *else* are they supposed to go by other than wild rumours?

Trevor, Woking,

The facts are that banks are in turmoil. They have lent too much money to too many people who can't pay them back. I seem to remember Northern Rock and Bear Stearns issuing similar statements days before their collapse. If they weren't being forced into writing down billions of dollars from dodgy lending they wouldn't have been targets for this kind of abuse. When selling subprime mortgages to unsuitable people the banks didn't bat an eyelid but now someone has a pop at them it's criminal. Six of one and half a dozen of the other.
Rupert ,Switzerland, I have never read a more paranoid, baseless and ill informed accusation. I think you will find it is western hedge funds short selling bank shares and with good reason. More to the point, so what if muslims are short selling. If their trades are correct then the banks would be failing anyway. If they are wrong they couldn't fund the margin call and will bankrupt themselves. That's why it is called a free market.

Edward, London,

This rumour was broadcast on Sky Channel 765 (Revelation TV) during a chat show called "R-Mornings" on Tuesday morning. Presenter Gordon Pettie called regular financial contibuter Terry Quinn who mentioned the HBOS 'crisis' a day before it hit the stock market.

Chris, Belfast, UK

As manipulative as it may appear, HBOS' closing price Wednesday , and specifically its relative performance for the day, implies that there remains an outstanding short position. Price the preference shares (tier 1 capital): on circa 9% they (hopefully) represent good value. The problem is that they have been getting progressively cheaper. The adage that there is no smoke without fire could be heeded here. The "fire" however will hopefully reflect sectoral factors rather than those specific to HBOS.

Mark, Sliema ,

The law needs to act, otherwise there WILL be another Northern Rock. And all because of false rumours. Capitalism was not meant to work this way.

Paul Francis, Brisbane, Australia