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Can Congress Save Us From the SEC?

Cramer during Wednesday’s Mad Mail segment called the SEC’s new rule to curb short selling mere “window dressing.” A day later he told viewers that apparently Congress will need to intervene if there’s any chance of stopping the kinds of bear raids that nearly brought the markets down at various points in 2008.

The Securities and Exchange Commission this week put in place a regulation that prevents short selling from pushing down a stock more than 10% in a day. The problem with this approach, Cramer said, is that investors now will hammer the share price in increments, rather than all at once. Either way, there’s probably no way to stop the bears, at least under the present rules.

The uptick rule, which forced traders to wait for a stock to tick up in price before they could sell it short, worked for about 70 years, but that was repealed under former SEC Chairman Christopher Cox. And so far the present chairman, Mary Schapiro, has given no indication that she plans to reinstate it.

That means a higher authority than the SEC is needed to clamp down on this practice, namely our lawmakers. And one of the most vocal about these market issues has been Sen. Ted Kaufman, the Delaware Democrat. Cramer has tapped Kaufman for his wisdom before, and in light of recent events wanted to bring the senator back to the show. Watch the video for the full interview.

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