Subject: File No. S7-12-11
From: Frances Martin

May 26, 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.My husband and I are, respectively, a retired attorney and a retired professor.  The value of our securities holdings was affected by the reckless behavior of Wall Street.  My adult children, also, felt the adverse effect of the stock crash and its subsequent effect on job security, compensation. I am offended by the Republican mantra of "Don't tax the job creators, and "get government out of the way." Wall Streeters are job destroyers, not job creators.  They enriched themselves by gaming the system. We need government protection to maintain a long term stable society. Please don't let it 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.

Thank you for considering my comment,

frances martin

racine, WI