U.S. federal and state officials are assessing whether "market manipulation" caused the recent volatility in banking shares, a source familiar with the matter said on Thursday, as the White House vowed to monitor "short-selling pressures on healthy banks," Reuters reported. Shares of regional banks resumed their slide this week after the collapse of First Republic Bank , the third U.S. mid-sized lender to fail in two months. Short sellers raked in $378.9 million in paper profits on Thursday alone from betting against certain regional banks, according to analytics firm Ortex. Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly. "State and federal regulators and officials are increasingly attentive to the possibility of market manipulation regarding banking equities," the source said. White House press secretary Karine Jean-Pierre said the Biden administration was closely watching on the situation, but any possible action would be taken by the Securities and Exchange Commission.
