Subject: Comments for File Number S7-12-11

May 24, 2011

I'm writing because I was affected by the economic collapse of 2008 and want to do everything I can to make sure it doesn't happen again. Specifically, I was laid off in 2009 and lost approximately 1/2 of my retirement savings. As you can imagine, this caused significant financial disruption.

Wall Street risk taking, greed, and outrageous pay practices were a major cause of the collapse. In fact, I would go so far as to say that these so-called capitalists were only too happy to socialize their astonishing losses, spreading them to the taxpayers of this country under the "too big to fail" doctrine. Meanwhile, they were happy to collect exorbitant salaries and even more outrageous bonuses. This simply can't keep happening.

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,

John Wallace