Subject: Comments for File Number S7-12-11

May 19, 2011

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.

I m a CPA servicg small, owner-operated business businesses. The slow or non-existent recovery from the massive crash caused by the major banks is now causing my typical client to contract severely or fail outright. The U.S. taxpayer took the down-side loss for the Banks. Today, the Banks are continuing the same unscrupulous business practices (for example, trading for their own account) and uncousciionable pay policies that caused the debacle. Greed soes not regulate itself. Our government must protect it's ordinary citizens by hiring regulators to regulate Banks and Wall Street, industries that will not regulate themselves. We need tranactional banks to support the Main Street economy

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,

William Earley