Christopher Cox, chairman of the Securities and Exchange Commission (SEC), said Tuesday the regulator will try to limit so-called naked shorting of shares in Fannie Mae, Freddie Mac and primary dealers including Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs.
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, Cox explained.
This will last for 30 days, the chairman added. The SEC is also planning more rule-making focused on the broader market.
Shares of mortgage giants Fannie Mae and Freddie Mac tumbled again Tuesday despite a government rescue plan.
Fannie Mae shares fell more than 19 percent while Freddie Mac shares declined about 22 percent.
On Sunday, the Treasury Department and Federal Reserve outlined plans to provide additional lending support to the pair as they struggle with mounting losses tied to rising defaults and waning investor confidence.
Source: Xinhua
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