The SEC's ban will last until at least October 2nd, with the possibility of being extended for up to 30 days (Britain's ban will last until January 16th). The ban includes every type of financial stock including all banks, brokers, thrifts, mortgage companies, bond insurers, mortgage insurers and all other types of insurers. Market makers are exempt from the ban because they claimed markets can't function properly unless they are allowed to take short positions (the usual there's one set of rules for us and another set of rules for you). Short-sellers with positions of over one million dollars are required to report this information to SEC and it will be made public (no trader ever wants their stock positions to be public). The SEC justified this action as being in the public interest because it will provide "protection for investors and will insure transparency." Transparency is apparently just a good thing for short sales however, since no similar rule exists for long positions.
Meanwhile over at the Comex, margin requirements for gold and silver contracts were raised as much as 47% on Thursday to dampen the explosive price rises (apparently investors lose confidence too if precious metals go up too much). The rise had taken place after a long and protracted sell off in the metals that affected the miners even more. While there were charges of illegal naked short selling on precious metal mining stocks, the SEC didn't seem nearly as concerned as it was when this same action took place with financial stocks. The U.S. government of course would like to see the price of gold and silver depressed in order to help support the dollar.
While the SEC's actions produced the government's desired result of bulling the stock market up in the short term, it will cost the U.S. a lot in the long term. While banning short sales is something that can happen in a third world backwater, it is unprecedented in the United States because it reeks of market manipulation and favoritism for privileged groups (generally those that have paid the most bribes to influential politicians, more likely to be called campaign contributions in the United States). The level of corruption an action like this indicates generally goes hand in hand with economic stagnation and capital flight. No one will play a rigged game for too long - and the SEC's ban follows a series of market rigging maneuvers on the part of the Fed that began last August. The United States market and economy will likely suffer for many years (if not decades) to come.