May 19, 2011
I TEACH IN THE INNER CITY; IT IS HEARTBREAKING TO SEE SOME KIDS COME TO SCHOOL ON COLD DAYS WITH A BLANKET BECAUSE THEY CAN'T AFFORD A WARM COAT. WHEN MAKING HOME VISITS TO ENCOURAGE KIDS TO COME TO SCHOOL, WE FOUND HOUSES THAT HAD NO DOORS OR WINDOWS. I AM NOT IN FAVOR OF GOVERNMENT GIVE-AWAYS TO EITHER THE FAT CATS ON WALL STREET OR THOSE PEOPLE WHO CHOOSE NOT TO GET AN EDUCATION TO ADVANCE THEMSELVES. BUT, AS A MEMBER OF THE MIDDLE CLASS, I SEE MY WAGES CUT AS WELL. I HAVE THREE DEGREES , HAVE RECEIVED GRANTS TO STUDY IN CHINA, SOUTH KOREA, AND THE MIDDLE EAST. IN TOTAL, I HAVE VISITED 10 COUNTRIES AND HAVE STUDIED AT AT LEAST 12 UNIVERSITIES IN THE STATES AND ELSEWHERE- ALL TO IMPROVE MY TEACHING SKILLS. I HAVE NOT RECEIVED A SIGNIFICANT RAISE IN FOUR YEARS. I SPEND ABOUT $3000 A YEAR ON MY STUDENTS. IT'S TIME TO EVEN THE PLAYING FIELD WHEN IT COMES TO WAGES.
I’m writing because my family and I were affected by the economic collapse of 2008, and we don’t want it to happen again.
Wall Street greed and outrageous pay practices were a major cause of the collapse. One way to change the incentives so they don’t collapse our economy again would be for regulators to use a *safety index* for incentive compensation, instead of a profit index.
Currently, most bankers receive stock options. So if they can generate more profits, the stock price goes up, and their options become more valuable.
Instead, what if they used the bank’s bond price, which measures the overall ability of the bank to repay its own debt? Another measure of bank stability is the spread on credit default swaps (the insurance-like policies that are essentially bets, where one gambler bets with another that a particular firm will fail). The closer a bank comes to failing (such as in failing to pay of its bond debt), the bigger the spread on credit default swaps.
Thank you for considering my comment,
Mary Roam