May 31, 2011
The economic collapse with its job and home losses has caused untold suffering in our communities. Many children are among the homeless. Our young people are still willing to work hard but they are not getting the opportunities that were available a few years ago.
Wall Street greed and outrageous pay practices were a major cause of the collapse. Please do as much as you can to change the incentives from profit to safe, good loans and honest dealings.
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,
Dorothy Kraemer
Pflugerville, TX