Subject: File No. S7-05-12
From: christopher rice

June 22, 2012

Regarding debt based security offerings:

In the mortgage lending that led to the 2008 subprime crisis, many lenders knowingly pressured home buyers towards loan amounts that implied high levels of repayment failure risk.
This has been documented. The data demonstrate conclusively that most liars loans were fraudulent, which means that there were millions of fraudulent mortgage loans because liars loans became so very common. This fact must have been known by the lenders.
As the U.S. Treasurys Office of Thrift Supervision noted in 2010, "The FBI estimates that 80 percent of all mortgage fraud involves collaboration or collusion by industry insiders."

This same industry, including most of the same entities, must now be strongly regulated in order to protect secondary market investors and the greater economy. Therefore, a cautious and conservative degree of mandated "skin in the game", must be forced upon these entities that have knowingly in the past, with inaccurate ratings, sold high risk debt based derivatives to secondary investors.

Based on our now fragile economy's need for much greater risk prudence, and with an eye on the past frauds committed,....

It should be ruled that all debt based securities issuers must retain in their accounts at least 25% of the riskiest tranches that they offer into the secondary markets for the duration of those securities' full terms. And likewise with 15% of the least riskiest tranches, with relative risk exposures between being retained at relatively graduated amounts.

And if the debt based security is not tranched, then 20% should be maintained by the issuer for the life of the underlying debt payment structure.

Regarding ratings agencies:

The ratings agencies should be payed by fees per investor transaction for that rated security, rather than being payed by the issuer. This way their compensation may be effected by the markets reaction to the accuracy of their ratings, and there payments may remain independent from the issuer. 20% of those payments should be retained and only released after the full term of the security payments has concluded.
This way, the ratings agency does also retain "skin in the game".

Please dont let the nation down. You are an agency originally designed for investor protection, with fair and honest market mechanisms to be maintained to the best of your ability. Your' creation was never intended for industry participant protection.

Thank You,
US citizen and investor