May 24, 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.
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.
But even more, would be for private banks and investors to turn the money system back over to the government itself. Bankers should have no such privilege of having money created out of thin air when a loan is created! And then the added audacity of charging intererst and fees on that "debt money" besides. This is ruinous to the country and should be regarded as treason. This country was, and could again be, prosperous if the money was removed from the private bankers hands and controlled again by the government. And as you know, wars would no longer be prosperous either so there could be peace and the planet would not be getting wrecked.
Thank you for considering my comment,
Joyce Decker