Cox Not Watching - Cramer's Stop Trading! (7/16/08)

Recap of Jim Cramer’s comments on Stop Trading! Wednesday July 16.

Fannie Mae (FNM), Freddie Mac (FRE): SEC Commissioner Christopher Cox made a "bold" move to ban naked short selling of Fannie Mae and Freddie Mac for 30 days. However, there is a problem; naked short selling, which involves selling a stock short before first borrowing it, has been illegal for any stock at least since 2005.  Cramer says this proves Cox could have stopped the damage by enforcing the rules,  but preferred to ignore the problem until it was too late. Cramer was also critical of the SEC's repeal of the uptick rule, which required short sellers to wait for an increase in a stock before selling it short. Through the SEC Ignoring and repealing these rules, hedge funds have been able to create an environment of panic and to slaughter certain stocks. "The government doesn't care," Cramer declared.

Cramer's solution for Fannie and Freddie is to issue a two-year note to fund a mortgage resolution trust to buy all the bad loans.

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