Subject: File No. S7-12-11
From: Mark Hein

May 25, 2011

I’m writing because my family and I were affected by the economic collapse of 2008 -- we lost one-third of our assets -- and we don’t want it to happen again.

Wall Street greed and outrageous pay practices were a major cause of the collapse.

We must change the practice of incentives, so they don’t collapse our economy again.  One way is to require  that bonuses be delayed for several years, at least five or seven, so they can be restricted to loans that prove good. Currently, bankers and lenders pay themselves on the volume of loans they generate, regardless of their quality.

We also need to replace the practice of granting stock options. These respond only to profit and stock price -- both of which are easily "padded" by bad loans.  Instead, I suggest using bonds, since bond price measures the bank's ability to repay its debts. Or you can require using the spread on credit default swaps, another measure of a bank's genuine stability.

Thank you for considering my comment,

Mark Hein

Woodlands Hills, CA