May 22, 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.
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.
Due to this terrible economy, I have lost my job at a financial institution that outsources IT jobs to India and the Philippines to cut cost while continuing to pay the executives millions in bonuses. My nephews have graduated college but are unable to fine work that has any kind of benefits and that pays more than the minimum wage which is not enough to live on. My friends are in similar situations. Those that do have jobs are expected to work much overtime. Benefits are being cut. Taxes are going up. Corporations are continuing to get money from taxpayers while taxpayers are getting poor and more desperate. In my lifetime, I have never seen people lose hope the way they are now. The government only seem t cater to the rich and the corporations. Their lobbyists are getting heard and are getting stronger. The parties are not working together to resolve problems as they have in the past. The mergers are eliminating more and more jobs and giving the consumers less choice. The country seems to be going downhill and our lawmakers are concentrating on issue that don't matter like eliminating funding for abortion. Where are the jobs? What is being done to hold the corporations accountable? Why are we still giving money to companies making record profits? I don't understand our lawmakers who are helping the corrupt while turning their backs on the people.
Thank you for considering my comment,
Barbara Pohl