The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, D.C.
The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, D.C. - 
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TESS VIGELAND: We've heard a lot this week about how this crisis represents a sea change on Wall Street. Things are gonna be different once it all shakes out.

Sounds familiar, doesn't it? Remember hearing that after the S&L debacle? The dot-com bust? Enron? Worldcom?

Well, there are signs this is different. It's not often you see certain forms of trading actually banned. As is now the case with short-selling of some 800 companies. It is illegal for the moment. By the way, there's already talk that short sellers will sue. And this may be just the beginning.

Marketplace's John Dimsdale tells us Washington, as usual, is not short of ideas for new regulations.

JOHN DIMSDALE: Former SEC Chairman Harvey Pitt says back in 1999 when Congress deregulated banks, brokerages and insurance companies, it didn't come up with rules for some exotic, new, financial transactions.

HARVEY PITT: Like certain derivatives and credit default swaps, etcetera, were left uncovered by any particular agency.

As a result, reform advocates say, huge debts are hidden from regulatory oversight that now threaten the entire banking system. Bill Singer, a regulatory attorney on Wall Street, says it's time for full disclosure.

Bill Singer: And if the regulators don't understand what's going on, then they either have to shut that business down or they have to warn us, like a smoke detector, that there's danger.

But Fed historian Allan Meltzer worries that tough new restrictions could chase banks overseas.

ALLAN MELTZER: With all its problems, it's a very successful industry and it finances the remarkable venture capital industry in the United States. We don't want to lose that.

Democratic presidential hopeful Barack Obama said today that to be effective new rules will need to be global.

BARACK OBAMA: So we're gonna have to update for the 21st century, the same kinds of regulations that we put in place for the 20th century.

And Republican John McCain advocated smarter regulation.

JOHN MCCAIN: We don't need a dozen federal agencies doing the job badly. We need the best federal agencies to do the job right.

But with an election looming, details will have to wait.

In Washington I'm John Dimsdale for Marketplace.

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