WASHINGTON — Mayor Bloomberg and Senator Clinton are urging federal officials to take action to stabilize the financial markets following the second plunge in the major stock indices this week.

Mrs. Clinton, in a letter to the chairman of the Securities and Exchange Commission, called for a temporary ban on “abusive and manipulative short sales practices” involving major financial firms, while Mr. Bloomberg plans to meet here this morning with the Treasury Secretary, Henry Paulson, and the SEC chief, Christopher Cox.

“We’ve got to do something to stabilize the markets,” Mr. Bloomberg said in an appearance at Georgetown University fewer than two hours after the Dow Jones Industrial Average closed down 450 points, or 4%. The mayor blamed the market losses on an increase in short selling, the practice of investors selling borrowed stock only to buy it back at a lower price.

After an even steeper sell-off on Monday, the Dow is down more than 7% for the week as investors react to the shock of the failure of Lehman Brothers, the sale of Merrill Lynch to Bank of America, and the unprecedented $85 billion bailout of the American International Group by the federal government on Tuesday.

The SEC yesterday announced three new rules, to take effect today, aimed at tightening restrictions surrounding short selling, but Mrs. Clinton said the regulatory agency needed to go further in curbing the practice on shares of 19 companies that the SEC has labeled “substantial financial firms.”

“A temporary moratorium would allow the marketplace to take a step back and get a fuller and more accurate picture of the conditions of the stocks involved in these short sales, and allow the commission and other regulators to identify and weed out the sources of those abusive transactions,” Mrs. Clinton wrote. “At the very least a semblance of order and rationality could be restored to the marketplace.”

She added: “Time is of the essence as just a few days of delay could be ruinous for both institutions and confidence in our markets.”

Mr. Bloomberg did not specify what actions he would recommend to Messrs. Paulson and Cox, and he acknowledged that the government was limited in what it could do.

He voiced confidence that the downward spiral of recent days would be temporary. “At some point there will be a rally,” he said.

The mayor was participating in a question-and-answer session in a packed lecture hall after scrapping plans to deliver a formal speech on the Wall Street turmoil.

In broad terms, he blamed the current crisis on a “we-want-it-now” attitude in the financial sector, and he criticized America’s practice of selling government debt to foreign investors as a way of putting off long-term solutions to its mounting fiscal challenges.

“It’s not clear who’s going to be buying our debt,” Mr. Bloomberg said. “It may very well be that the next wave is going to come back and bite us.”

He backed the government’s decision to rescue AIG after allowing Lehman Brothers to go bankrupt, saying federal officials had correctly determined that the failure of the insurance giant could have a far more devastating ripple effect on the broader economy than the collapse of the storied investment bank. “AIG was just too big to fail,” the mayor said. He added: “They just didn’t have any choice.”