Regional Banks Brace for Turbulence Amidst Investor Warnings.
Short-covering may be the driving force behind Friday's rally in beleaguered regional banks, with the $2.7 billion SPDR S&P Regional Banking ETF (KRE) soaring as much as 6.6%, fueled by a record surge of around 80% in PacWest Bancorp. The rebound follows several days of brutal selling and a surge in bearish positioning in regional banks, with PacWest saying this week that it’s exploring strategic options. The heavy shorting in banks led to some calls this week for short-selling to be restricted, a possibility that the White House batted away on Friday.