As key mortgage financiers Fannie Mae and Freddie Mac face financial crisis combined with continued problems in the brokerage sector, the SEC has restricted short selling in these distressed areas. The plan will last 7 days, starting Monday July 21, with the option to potentially extend the order 30 days. The order has been extended additional days.
In his testimony before the Senate Banking Committee on Tuesday, the regulator’s chairman, Christopher Cox, said that the S.E.C. will issue an emergency order adding a “preborrower requirement” on the shorting of Fannie, Freddie …

What is Securities Lending?
Securities lending is the temporary transfer of securities on a collateralized basis from one party (the lender) to another (the borrower) for a fee. The borrower must return the securities to the lender after an agreed period or on demand. Securities lending allows the lender to earn enhanced returns on securities through finance charges and provides the borrower with many beneficial opportunities. Most securities lending is collateralized using cash, other securities, or a letter of credit. Securities lending also plays a more general beneficial role by increasing …