1. The ban on shorting helps one thing not another, perhaps it prevents certan stocks from being attacked. No doubt we would still have a Lehman, HBOS and Merrill if it had been done earlier - which equates to 40000 jobs in UK alone - so the widespread effect on the economy is there to be seen. But also note that in the past we have had no short selling and bear markets still exist, also that since we have had short selling banned we have had a week of extremely low volumes (very bad considering september is one of the busiest months traditionally) and extremely high volatility. In a market of high volatility people will not invest in 'risky' assets, so really does shorting have the effect that we desire. Personally, I think that its a tough balance which is why people are paid so much to make these decisions - but either way I can't see it as a long term solution to anything.
2. The effect on Goldman/Morgan is great (in the short-term at least), they have access to new deposits funding which is cheaper than the interbank markets and now this gives them access to the FED discount window as well. In the long term the worry for them though is what made them so successful was the ability highly leverage up in the good times... now they will be far more regulated and therefore will not be able to do this as much. As for individual trading desks, you may find they have to scale down their risks or at least show that they understand them and manage them better.
