Big Wall Street banks, which tend to be wary of financial markets regulation, have historically taken a pro-short-selling attitude, arguing that short selling enhances liquidity and price discovery. That changed in a big way last year when Bear Stearns and Lehman Brothers argued vociferously that short sellers were destroying their companies. The government responded with a temporary ban.

Now the issue of short selling regulation in general is hot again. And yet, according to Bloomberg, the shorts are back. "Shares borrowed and sold short increased sixfold since February 27, the day the U.S. Treasury announced it would convert some of its preferred shares in the New York-based bank into common stock." Short interest in Bank of America, MetLife and American Express has also spiked but not as much as the interest in Citigroup. The results of the stress tests will likely be the pivotal moment in this round of bulls vs. bears. 

For more:
- here's the Bloomberg article

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