Subject: Comments for File Number S7-12-11

May 19, 2011

Iím writing because my family, my friends, and I were affected by the economic collapse of 2008, and we donít want it to happen again.

My mother and father lost over $250,000 in their retirement funds. They're middle class people and had been saving for decades. My mom may never be able to retire now.

The collapse happened about a month after I finished graduate school with an MA in clinical psychology. In order to get a license to practice in my state, CA, you have to do 3000 hours of internship- and 95% of the internship venues pay nothing, not one cent. Those that do pay barely pay minimum wage. Because of the economic collapse my dear friend who graduated with me lost almost $500,000 in stocks. He had planned to use that money to allow himself to complete his internships while still being able to feed his wife and child and pay his mortgage. Since he lost all that money he has been forced to give up his dream of being a therapist and seek a job back in the industry he was trying to leave. He has still not been able to make any progress towards his internship hours and all of the time, love, and money he put towards his education may be totally lost.

Although I did not lose any money in the financial crisis (because I never had any) I had planned to leave my job as a paralegal and get a job as a waitress in a fine dining restaurant that would pay enough for me to pay my rent and bills but allow me to work at night so I could do my internship hours in the daytime. Sadly, the financial meltdown has caused many fine restaurants and SF to close and those that are still open are either not hiring or simply don't get enough customers for the wait staff to make any money. I have also been unable to pursue my dream of becoming a therapist and fell into a deep depression when I relaixed that the $100,000 of financial aid I took out was coming due. I'm currently making payments of $500/month on the same income I had before.

I've not had a raise since 2007 because the law firm I work for has lost over half of our clients due to the fiancial crisis. Our clients are small to medium sized nonprofit businesses. When nonprofits have to cut their budgets they cut off their attorneys and the boards and Executive Directors start doing their own legal work. This is not only bad for their attorneys and their attorney's taffs (like me) but it's bad for the nonprofits themselves because,as I'm sure you know, you can get into a lot of trouble doing your own legal work.

I am finally ready to take the plunge and cut back my hours at my paid job to begin an unpaid internship with the SF Unified School district providing free therapy to middle school children. I will have a hard time making ends meet even though I will be working over 60 hours per week between my internship and my paid work. This isn't just bad for me, it's bad for the public schools and poor children. When people such as myself and my friend, who would normally be able to provide this therapy for free to the schools and to low-income children are unable to do so in large numbers (as is the case now) the schools and the children suffer.

Everyone is effected. All of this is connected. I do not believe that it is reasonable to grant financial industry executives outlandish pay, obscene bonuses, and truly ludicrous "retirement" bonuses when they personally ruined this many lives. It's obscene, truly obscene. If the companies that hire these executives are unwilling or unable to tie executive pay to executive performance then I demand that Congress step in.

As a pre-licensed therapist I can promise you that any behavior that gets rewarded WILL BE REPEATED. There is no wiggle room in that statement. It's not up for debate. It's been proven 10,000 times in rigorous scientific studies. If you get paid millions of dollars in salary and tens of millions in bonuses even though your unethical business practices have tanked the world's economy then you have the incentive (10's of millions of dollars of incentive) to continue those same unethical practices. To eliminate bad behavior one must remove ALL rewards for that behavior and institute punishments that are: swift, certain, and strong. At this point swift and certain are out the window- but we can at least make the punishment strong. Please.

Wall Street greed and outrageous pay practices were a major cause of the collapse. One way to change the incentives so they donít 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 bankís 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,

Marcia Segura