Citigroup’s (C) CFO says he see write-downs through the end of the year. The head of hedge fund Paulson & Co,says bank losses will hit $1.3 trillion. Write-downs at Lehman (LEH) and AIG (AIG) were much larger than were expected.

It may well be a long, hard second half for the bank, insurance, and brokerage sectors.

It is any wonder that short sellers have upped their bets against big financial companies. As of June 15, the short interest in Wachovia (WB) rose 26.2 million shares to 177.3 million. Share short in Washington Mutual (WM) were up 50 million to 254.8 million. The short interest in Citigroup (C) was up 20 million to 135.7 million. Shares short in Ambac (ABK) rose 12.3 million to 74.5 million. The short interest in JPMorgan (JPM) was up 11.9 million shares to 63 million and shares short in AIG (AIG) moved up 12.6 million to 67.4 million.

Car stocks were also hit hard by shorts. Shares short in GM (GM) rose 14.9 million to 120.2 million. Shares short in Ford (F) rose 31.3 million to 317.6 million.

Short sellers also made large increases in their positions in GE (GE), Wal-Mart (WMT), Motorola (MOT), and Delta (DAL)

Shorts moved out of EMC (EMC) and Qwest (Q).

Douglas A. McIntyre

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