SEC Preparing For the Perfect Storm?

The Securities and Exchange Commission said Tuesday that it will try to limit so-called "naked" short selling of shares in Fannie Mae, Freddie Mac and big brokerage firms.

The list includes Lehman Brothers (LEH), Merrill Lynch (MER), Morgan Stanley (MS) and Goldman Sachs (GS). Not surprisingly, two of those are due to come out with earnings later this week.

The SEC will issue an emergency order stating that all short sales of shares in these companies will be subject to a "pre-borrow" requirement, said Christopher Cox, chairman of the SEC. This will last for 30 days, he said. The SEC is also planning more rule-making focused on short selling in the broader market, Cox said.

One comment we got on the news: "WOW! I would call this premeditated damage control -- much the same as preparing for a hurricane!!!"