5 Dumbest Things on Wall Street: July 18

1. Naked Stupidity From the SEC

Don't even think of getting naked on Wall Street these days. And by no means should you get naked anywhere near Fannie or Freddie.

The consequences will surely be dire now that SEC Chairman Chris Cox issued an executive order banning naked short-selling of Fannie Mae(FNM Quote) or Freddie Mac(FRE Quote) shares. Naked short-selling involves selling shares short without having borrowed some first.

Tuesday, Cox announced to the world that the SEC was taking emergency action to prohibit the naked short-selling of shares of the two gigantic mortgage firms.

"In addition to this emergency order, we will undertake a rule making to address the same issues across the entire market," Cox said to Congress.

Under the new terms, short-sellers will have to "pre-borrow" shares before they can engage in any selling activity.

That'll surely fix the mess the mortgage lending giants find themselves in. The idea of the move is to stop speculative interests putting too much selling pressure on the stock price, which could then in turn start a rout.

Never mind that naked short selling has been illegal all along.

Never mind that the SEC could have busted naked short-sellers at any time. An executive order will surely show the scoundrels that Cox is serious.

So why is Cox bothering?

The answer is that showboating before Congress is a lot easier than what he should really be doing, which is catching crooks.

Dumb-o-meter score: 95. With Cox around, better don a bikini.