Commentary: Short-sellers were just feeding on weakness of the banks

Blatant short-selling of banks has been going on for months now - the watchdog said as much when it targeted those trying to make a killing out of their rights issues. The consensus is that this will work: no hedge fund is going to risk public vilification by not closing out their positions ahead of Tuesday's deadline.

But to assume the short-sellers are the only villains of the piece is to miss what has really occurred. The shortsellers feed on weakness and it's the banks that got themselves into this unholy mess.

They were forced to turn to their shareholders for more cash. It's their own greedy behaviour and over-stretched finances that are to blame, more than someone scenting blood.

The ban is meant to be temporary - to make it anything more than that would go against the belief, expressed by none other than Hector Sants, the FSA chief himself, that the tactic is "a legitimate investment technique".

However, if it is only to be short-lived, then the banks must get on and strengthen their defences.

To imagine that this spells the end of the credit crunch, is naive. Unless liquidity is restored and cash starts flowing between the banks again, not much will change.

After all, it wasn't short-sellers that stopped banks trusting each other and holding on to their money. In that regard, the move by the US to remove investment banks' bad mortgage debts and park them in some kind of giant financial warehouse, is of enormous significance.

Again though, what it starkly highlights is the banks' inability to clean themselves up.

The authorities have taken charge and the bankers' claim to be the brightest and the best has been found to be as hollow as their balance sheets.