May 31, 2011
Elizabeth Murphy
100 F Street, NE
Washington, DC 20549
Dear Murphy,
America paid a terrible economic price because of irresponsible risk-taking by Wall Street executives. Those executives took those risks because they knew that they could walk away with billions of dollars in bonuses and stock options and never pay for the long-term consequences of their actions. We need tough rules so that Wall Street pay packages don't encourage short-term risk taking.
Your rules should require at least a five year deferral period for executive bonuses at big banks, ban executive hedging of their pay packages, and require specific details from banks on precisely how they ensure that executives will share in the long-run risks created by their decisions. It should apply to the full range of important financial institutions, and draw in all the key executives at those companies.
Once this rule is passed, only you will know the details of its enforcement. But it's important for the public to know the progress you are making on this vital issue. You should report back to the public annually with a detailed report on progress in creating accountability for Wall Street pay.
I am one of those folks who have been badly impacted by the "banksters" risky business practices. I ran a home investment and rehab business investing in distressed properties in lower income areas and refurbishing them and reselling them to families of modest means. When the meltdown occurred, my business evaporated, and I am now desparately trying to find work and keep the bank from foreclosing on my own home. The fact that the banks were allowed to gamble on their investments failing with credit default swaps has made the banks no longer really approachable for mortgage modifications -- because they get full payment if they foreclose from the credit default swap -- and they get little or nothing if they do a modification. This is why Obama's "Making Homes Affordable" process to get banks to modify loans has so dismally failed. That's yet another way these executives have taken advantage of the pumlic all for short term gains.
Please put some teeth in your regulations -- what has been proposed so far does NOT go far enough. The only way we are going to get the banks to act as the conservative and useful institutions they were between the great depression and when they were deregulated in the 90's is to force them to act responsibly -- and that means regulating their bonuses, pay, and their behavior. This industry has proven themselves twice in less than 100 years incapable of regulating themselves -- they caused the great depression and they caused the "great recession" we are now living through by the risky behavior they engage in when they are unregulated. THEY CANNOT BE TRUSTED TO GOVERN THEMSELVES!
Please take action -- and make it strong action!
Sincerely,
Philip Reich
Referencing Docket No.'s:
OTS: RIN 155-AC49
OCC: RIN 1557-AD39
Fed: RIN 7100-AD69
SEC: RIN 3235-AL06
FHFA: RIN 2590-AA42
FDIC: RIN 3064-AD56
Sincerely,
Mr. Philip Reich