What Traders Want To Help Street

What can the government do? Forget Lehman, the Street is debating what the government could do (that would not involve a bailout of a company) that might stop the relentless selling of financial names.

This debate is being given an additional impetus because today, shorts appear to have moved on to a new name with financial exposure: our parent company General Electric, which at one point was down 6 percent, approaching a five year low.

Actions many traders would like to see:

1) Bring back the uptick rule. This is Number One on many traders' wish list. Last July the rule that prevented traders from shorting on a downtick was eliminated. Traders say that eliminating this rule has had the effect of making it much easy to build--and cover--a short position, and they believe it bears a good part of the responsibility for the tremendous uptick in volatility we have seen in the last year. Those opposed to bringing back the rule says the uptick in volatility corresponds with the credit crunch and would have happened anyway.

• Fed Shouldn't Rush to Lehman's Rescue: Sen. Shelby

2) Bring back the prohibition against naked short selling of financials--here again, traders believe that the brief prohibition this year (July to mid-August) made a difference in stabilizing financials.

3) Change regulatory capital rules to allow banks to stop mark-to-market from hurting Tier One capital. These rules were changed only recently, so reversing them would be difficult.

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CNBC's Names in the News:

Lehman

WaMu

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