The Wall Street Journal headline reports (subscription required) that the SEC is "deluged" with support for the return of the uptick rule. Investors who've watched their portfolios hemorrhage value are quick to blame those mean, nasty hedge fund short seller-types.

I'm going to write something here that probably flies in the face of what most people are thinking but here it is: Who the heck cares what most people think about the uptick rule? Seriously. Of course most investors are going to oppose anything that makes it easier for stock prices to fall but the role of the SEC is to maintain a fair and orderly stock market -- not to appease the short-term oriented desires of people who want to look at their portfolio statements and see black.

The SEC is expected to propose within the next month that the uptick rule be restored in the stock market. The uptick rule required that short sellers only short stocks on an uptick and was designed to prevent bear raiders from driving stocks down with aggressive shorting.

The S&P 500 is down 53% since the rule was scrapped in July of 2007 and Barney Frank and Chris Dodd are among the proponents of bringing it back.

WIth the market tanking, short sellers have become a popular scapegoat. Some observers whine about naked short selling while others lament the end to the uptick rule, suggesting that that has been a driving force behind the market turmoil.

Vanguard Group founder John Bogle, one of the few heroes in a financial services industry filled with villains, has a letter in today's Wall Street Journal explaining why the "blame the shorts!" explanation is wrong. He states it simply:

The uptick rule will not prevent price declines or bear raids. These events can and will continue to occur when security prices are too high compared with a company's earning prospects and risk.

Exactly!

The reality is that bubbles in equities form, and policies that make short-selling more difficult allow markets to overheat and inflate. Now that the party is over, angry investors are lashing out at short sellers.

TheStreet.com's Jim Cramer says they're not just the opposite of longs -- they have the power to destroy companies.

Today will be riotously ugly. Today's a day where you could take down a Capital One (NYSE: COF) (Cramer's Take) or a Citigroup (NYSE: C) (Cramer's Take) -- some bad credit card exposure there -- off of American Express (NYSE: AXP) (Cramer's Take). You can bang down Nat City (NYSE: NCC) (Cramer's Take) into oblivionville off of it and hammer Merrill Lynch (NYSE: MER) (Cramer's Take) to the point where you could hear the rumors fly of capital needs. Freddie (NYSE: FRE) (Cramer's Take), merciless Freddie, right at ya. Today's the day when the uptick rule would be the only friend to the notion of owning stocks without fear every minute, fear that they will break your stock. Today's the day that the uptick rule can save Lehman (NYSE: LEH) (Cramer's Take) from $14 or lower. Today's why we need it.

Yet, every time I do a piece that talks about the need to reinstate the uptick rule or enforce the naked short laws, I am immediately greeted with the same nonsense: why should the longs get protection the shorts shouldn't? In fact, other than the usual gang of two -- Patrick Byrne and David Patch -- I don't get any positive feedback on these pieces like the one I did last night on "Mad Money."

The SEC recently eliminated the 'uptick rule', which was put in place after the Great Crash of 1929 in an effort to prevent bear raids. The rule mandated that stocks could only be shorted on an uptick -- the price of the short-sale had to be higher than the last price.

Some commentators, including Chuck Jaffe, are complaining that the end of the rule has allowed short-sellers to pile into stocks more easily than before. And maybe that's true. They complain that this has increased the volatility of the market, and maybe they're right.

But here's the problem: There's really no particularly intelligent justification for the rule. Short-sellers are already required to go through the cumbersome process of borrowing shares before they short. If we're really concerned about the uptick rule making it too easy to short and drive prices down, shouldn't we also implement a downtick rule? That way it would be harder for pumpers and promoters to drive up the prices of stocks.

Of course we shouldn't do that. That would be insane. But it's really not substantially less crazy than the uptick rule.

We have tons of regulations on short-sellers, and the fewer we have the better it is for America -- effective short-selling keeps things from getting out of hand like they did in the internet bubble. It also provides an incentive for investors to uncover fraud. The market has such a bullish bias, and it's great that people can also make money by looking for signs of trouble. That's what makes a market.

The SEC has voted to end price restrictions on short-selling. Under the uptick rule which was instituted in 1938, shares could only be sold short on an uptick -- That is the price of the stock on the short-sale must be higher than the last trade. The SEC also said it would strengthen its "fight" against naked short selling.

This is a victory for investors: The much-maligned short sellers are the financial markets' first line of defense against fraud and ludicrous valuations. Rules making short-selling easier increase the incentives for market participants to police the markets themselves, and can prevent fraudulent or overvalued companies from running even higher.

The crackdown on naked short selling however, appears to be a concession designed to appease a very vocal group of conspiracy theorists. As long as shorts are eventually covered, there appears to be little harm in naked short selling. The requirement to borrow shares is cumbersome and unnecessary. I've discussed this issue with numerous anti-short selling people, and none have been able to provide an answer to this challenge:

Please provide the name of a legitimate, profitable business that has been harmed by naked short selling.

In spite of all the complaining and conspiracy theories, I've never seen a company take the action to deal with a poor valuation supposedly caused by short-selling: If Overstock (NASDAQ: OSTK) is so undervalued, why doesn't Patrick Byrne take it private? Why aren't suitors lining up to acquire it?

There are a number of mechanisms in the market to prevent stocks from receiving gross undervaluations: Private equity funds, strategic buyers, share buybacks, etc. By making life harder for short sellers, the SEC is weakening one of the only mechanisms in place to proactively stop fraud.