January 23, 2009

Subject: Changes to Policy

Dear Madam Chairwoman:

As a concerned investor, might I recommend - as so many have - that you have the Commission take immediate and urgent action in the following areas:

1) Reinstate the uptick rule.
2) Change mark-to-market accounting rules for long-term investment securities.

The former will help prevent "bear raids" on stocks as we saw this Tuesday in the banking sector; the latter will help alleviate banks' capital problems. These matters, coupled with credit default swaps and other things, magnify stock market volatility and seem designed to allow short sellers to make enormous amounts of money at the expense of others. It makes no sense to mark security being held to maturity to current market prices - that is, if I put my house on the market and it doesn't sell today, though it might not be worth what I want it certainly isn't worth nothing - whereas concerted short selling increases the price of credit default swaps, which causes ratings agencies to lower ratings, which lowers stock prices, which increases the price of credit default swaps, and so on. The uptick rule will put a brake on moves like we saw in State Street Bank on Tuesday, which fell 59% in one day.

I would also like you to institute an investigation into concerted short selling by institutions.

I believe these two simple changes could help turn the economy around far more than TARP or any other program. If mark-to-market accounting rules remain unchanged, in the future, when a price is discovered for these securities, we will see ourselves faced with massive write-ups - or massive profits for whoever buys the securities at pennies on the dollar - just as we did with Brady Bonds in the 80's. It is just one more piece of the financial engineering chicanery that got us to where we are today.

Thank you for your attention.


Steven Hanley
former bank auditor