Subject: Comments for File Number S7-12-11

May 26, 2011

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

I am retired as of 2010, which was 4 years before I originally planned. I will make due with less but I dread the onset of inflation. Unlike government pensions, my pension has no cost of living adjustment. I am still obligated to pay cost of living increases to the government for those with adjustments so the impact of inflation will be devastating. I am afraid the unscrupulous banks, brokerages and corporations will incite inflation to reduce the debt they carry on their books.

I am afraid our lobbyist-controlled federal government will seek the same inflation remedy it they did in the 70's when I had 10% to 14% annual raises to keep up with living expenses. With Republicans in charge, tax increases are out of the question. Our nation is stabilizing in population and GDP growth so there will be no systemic revenue growth. The only tool left is inflation and the Republicans are careless enough to use it. That is my great concern.

There are much better ways to control the financial excesses that caoused this last recession.

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,

Stanley Tomkiel

Mount Laurel, NJ