'Naked' Short Selling Gets a Close Eye (2/2)

The chairman of the Securities and Exchange Commission, Christopher Cox, says naked short selling is not out of control. But he says the order was needed as a target=_blank>preventative step to help bring confidence back in financial markets. He says the goal is to stop naked shorting that is done target=_blank>abusively to drive down a stock price.

He said Thursday that the agency wants to extend what he called target=_blank>operational protections throughout the market.The emergency" class="hjdict" word="emergency" target=_blank>emergency order went into effect on Monday. The ending date is this coming Tuesday but it could be extended into August.

The American Bankers Association has urged the commission to extend the target=_blank>restrictions to all publicly traded banks. It says protecting only a few big banks will cause short sellers to target" class="hjdict" word="target" target=_blank>target smaller ones.

The July fifteenth order covers seventeen international banks as well as the nation's two largest housing finance companies. Fannie Mae and Freddie Mac have lately been the main support for the troubled housing market. But their share prices have fallen sharply this year.

A housing rescue bill on its way to becoming law includes a plan that would let the target=_blank>Treasury invest in Fannie and Freddie if needed. The plan also includes a new target=_blank>regulatory agency with stronger controls over those two companies.