TheStreet.com's Jim Cramer says this administration's hallmark is coming too late to the party.

A headline came over the wires yesterday, and it caused me to throw my hands up in shock: The SEC is debating new short-selling rules for the market.

I said to myself, "They have to be kidding."

How can they be so obtuse?

How can they not get what is going on?

When the market bottomed on July 15, three things occurred:

the Congress got religion on the housing bill, and the president went along;

gasoline and oil peaked; and

the SEC finally decided to crack down on the reckless bear raids that were making it impossible for our financials to refinance.

The financials then rallied huge, just huge, and the prudent ones, like Merrill's (NYSE: MER) (Cramer's Take) John Thain, took advantage of the short-selling crackdown and first, brilliantly, said he didn't need capital, exacerbating the plight of the shorts, and then jammed on a gigantic equity offering that will let Merrill get through this period.

That alone was worth the price of the anti-manipulation ban.

Then, somehow, somewhere, in the bowels of the laissez-faire SEC, somewhere within the classrooms of academics they employ, someone had the bright idea that the anti-manipulation rules didn't do anything. The academics were abetted by a series of articles, clueless articles, informed by short-sellers, that the anti-manipulation ban didn't work!

I was aghast at this, given that the powerful rally off the July 15 lows clearly needed those rules to allow capital to be rebuilt. As soon as I saw the SEC didn't re-up the rules, I recognized that any financial that hadn't taken advantage of the momentary hike to first say it didn't need capital and then pull a Thain was in big trouble. That meant Fannie (NYSE: FNM) (Cramer's Take), Freddie (NYSE: FRE) (Cramer's Take) and Lehman (NYSE: LEH) (Cramer's Take).

Sure enough, some knucklehead talked to Jonathan Laing, a good reporter from Barron's, and basically said, "We are about to confiscate Fannie and Freddie, because they are undercapitalized." Given that the united stand had been that Treasury blessed the capitalization, at the same time that the shorts weren't allowed to create an unlimited amount of stock to hit down Fannie and Freddie (and that they were worried about upticks, even -- wow!), you suddenly had a total switcheroo. The SEC blessed manipulation down, and the Treasury favored destruction of the equity. We got what both wanted -- and I can't believe they wanted it -- on Monday.

Lehman, without the anti-manipulation rules, will ultimately be defenseless. As I said in New York magazine, it is just too easy to take down the stock and therefore the company -- Lehman is not General Mills (NYSE: GIS) (Cramer's Take). To analogize, you can't kill General Mills by manipulating the stock down. Financials need faith, need credit; almost no other stocks other than the autos and the airlines -- big consumers of credit -- need to be protected from manipulation.

So what does the SEC do? It tells people it is worried about manipulation again. Right when the earnings of financials are subpar and Fannie and Freddie and Lehman could be goners. I could include AIG (NYSE: AIG) (Cramer's Take), but that company wasn't protected anyway and is immolating on its own accord.

Put aside for a second that Fannie and Freddie may be worthless ultimately. Lots of stocks are worthless, but the entities behind them can recover long enough to make them worth something again, as we see from the resurrection of MBIA (NYSE: MBI) (Cramer's Take).

But we needed the breathing room, and the SEC provided it. Then the SEC moronically took it away. Now it wants it too late.

Just like everything in this administration -- the vacillating over interest rate cuts until it is too late, the dallying on the housing bill until it is too late, the people saying the fundamentals are sound when they are dire -- the SEC is gripped by the same indecision.

When coupled with the indecision of a Richard Syron at Freddie and the indecision of Dick Fuld at Lehman, the SEC's waffling has proven deadly. If only they had actually looked at the July 15 bottom and realized how much they were responsible for the breathing room, the SEC might have been able to save the taxpayers billions and spare the country of a series of bailouts and failures that will ultimately impact for billions.

Instead, they took counsel from people who didn't know how the markets work.

Now they are back noodling.

Too late.

Look what's happening.

Arson, aided and abetted from some knucklehead in Treasury who spoke to Laing -- that's a leak worth investigating -- and by the SEC's cluelessness.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.