"Could it be that the financial institutions in trouble are the ones shorting (and what ever else) the markets and regulations be damned because when bankruptcy stares in the face there are few options."

I find it interesting given that this bank could face bankrupsy. They could be selling shares held, (doubt it) or shorting the poop out of many stocks. If they are short a few million shares and go bankrupt, those shares are now in the "system". What happens to them? What happens to anyone who bought "those shares" in good faith? What happens to the companies who's shares are shorted?

We DO live in interesting times. What a curse.