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SCIENCE ANDTECHNOI.OGY 

COMMlllfE 

~• 'IIC LH.1\111 ti'~ {11'1; 

::-..-v( :i It(;.\: :()~,i~~ t,~.Ll Lhd. ~•~1,_;11 r 

h:hruary 16. 2010 

Sheila Bair 

Chairman 

'\ ; ·\'~,-.:~- ·.; ~. . .·, / 

~Lan ~rnpuon 

Qtongresg of tbe -mniteb ~tates 

St1J D1srrnr. jftorib,1 

h.:di.:ral Dqmsit lnsuram:i.: Corroration 

S 50 Si:ventei.:nth Street. NW. Room 6076 

\\ashington. I)(' 20429 

lk,ir Chairman Bair. 

h-l: 11 l • •,.··.'• ,r.1., H, ... 

•••••· .. •,I•· I)•••· 

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.:~,= ~ ..... , ... ' ' •. . . .\.' .. 

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FEB 2 4 

We 1Hiti.: to .:lrplaud you for tuking an imronant sll:p towards holding hank excculi\\: · 

accl1untahk· ll)r risk~. dcstructi\'c hcha1·ior. II' your proposal IP tic deposit insuram:~ri.:mium!'> 

to t:x.:..:uti1,: 1..'t>mp1..·ns<1tion strudurcs is cnactl·d. hanks\\ ill b1..· ..:hargcJ more 11,r d..:posit 

insurance if their cxec11ti1·es gamble with the lirm ·s moni.:y. Our constitlll'llts l'cel that 1..•:-;..:cuti1 c, 

on \\'all Street ha1c looted their banks. and then hal'l: hilled taxpuycrs "for scni..:cs rendered ... 

)he) h;1n: lost conlidcn..:c in other regulators. lhanb to you. linall~ it si.:cms as thliugh there's a 

1..·tip on the h-:at on \Vall Street. 

A bank 1..·x1..·rntiv1..· who se1..·ks to maximi1c shllrt-tcrm guin al th..: expense or snln:nc~ is not _just 

putting his bunk's sh,1rch11ldcrs and creditors at risk. hut ulso the l.;S taxpayer uml the !·DIC 

depusit insurancc l'und. l~y seeking to forc..:losc that possihilil). thi.: 1:1)I(' ..:ontinucs to cam th.: 

kind or puhlit: trust that is so lacking throughout the regulatory ..:,inrn1unity. 

On the spc1:ili..: 4ucstio11 nfwhcther pay packages contribute to risk. it shoulJ by no,, be quit1..· 

,1hvious that ;1 linanci,il institution that pa\s its cxcrntil'es ,,ith a ·h1..•ads I win. tuils you l,1sc· p,1~ 

pack.ig.: is likd_1 lo d..:stro~ itself. We sa1\ this Juring the S;i, ings ;ind l.m111 crisis. during the 

bailuut lit' l.ong Term Capital Management. and Juring the most r..:ccnt linancial crisis. l'aul 

\'okkl·r. Hill Bl,1ek. Simon .Johnson. and l1th1..·r 1..·1:(mo111ists and obs(.'n l'rs h,11 c 111ad1..· this p11int. 

It's also dear. as 111..·II. 11hat h,1ppens \\h..:n excrnti1es hu1c \\ell-designed pu) packages. When 

·bulge bra1:kct" inn:stmenl lmus~s \\ere private partnerships. e:-;ccutin:s \\ere leery ot'pulling 

;heir own capital 1111 the: line: in risky schemes. !'his created a nalllrnl barrier aguinst rcL·klcss and 

risk~ bcha\ inr. When \\'all Str1..·1..·1 lirms b.:gan going public and oi'll<1;1Jing risk 1111to 

shareholders. cxccuti1c hch;i,·it,r suffered. Now that these tinns can gambk with mon1..·> l'rorn 

the 1:l·deral RcsL•rvc and frorn wxpaycrs. CX(.'CUtivc heha,·ior is C\\:!1 \1urse. 

~-:11,.11 :) , ,,, W• ·,: I I·, 1- . .,•1 I" 
Whih: i1 wuulJ he nii:l· lo presume 1ha1 large hanks arc chastened b) their rci:cnt need hi hcg lhc 

public li1r capi1al. it is clear 1ha1 limmcial scn·iccs cxccuti\cs "just J1111·1 k?Cl i1·· 1.lo~d Ulankkin 

or (ioldman Sachs rci:cntly claimed 1h31 his lirrn is ·uoing th.: lorJ· s \\ork'. I 1.in·arJ Business 

Scho11l l'roli:ssor ,m<l Uoldman Bo:.ird member Bill (ieorge just wrnpared hunkcrs who lusc 

gurg.untuan amounts ur mone) 10 prufcssion.11 a1hlc1es and movie stars. l"hc kirge hank ll,hl>y has 

"orkcd !"uriuusl,:. to "aler down reform: the Sci:uritks Industry and Financi,d \-lark els 

.-\ssucialion is resisting u mild l~c on large hanks. and :iggressi\·ely suugl11 loopholes in 

dcri\'111i1 cs lcgisl<11 illn. 

Lnlikc !hose at co1nmuni1y hanks. executives a1 largi: Wull Stn:cl hunks have i:on~istcntl,:. 

displ.1ycd c:1valier attitudes towards risk. Despite large bonuses on Wall Street anJ the gnashing 

0!'11.:elh among regul.itors. very lilllc SCl'lllS to h.Jve changcd as ofyct. We .ipplauLI Chair110111c111 

Bair and the FDIC' for brcuking !his damaging. cycle vr passivity. ,mll laking the lirst real steps l,l 

n:in in dangcrmis c.,-:-:utin· i:om1K·nsa1ion s1rui.:1url!s. :\l.·corJing !Ll Se-:tion 7 nr tile l·eder:il 

Deposit l11surn11ee .-\cl. the FDIC chmrly has the authority tu use an~ fo-:tor i1 "determines 

n:lc\anl .. when assessing the prohahilily th:it the Deposit fund 11ill incur .i loss "ilh respci.:110 

an:, ~ri:cili\: institution. (.\rn1ri:nsalio11 structures arc cc11.iinly rclc\ant in terms 11fum.lers1al1l.li11;; 

the risks that lhcsc hanks arc incurring. 

We dis,1gn:e with Cnmptroller .lllhn Dugan·s disscnling slutement on this. ('nmptroller l>11g:1n·., 

.irgument is !hat higher insurancc deposit costs ,ue unnei:L·ssary mcrdy because ('imgn:ss is 

d-:bating grnnlin~ ,1ulhtirity 10 rein in c.,ci:utive pay. and th:11 the 1-"l·dernl Rescn e is 11-orking 011 

the prohle111. I le also argues that there is no i:,·idcncc th:1t c.xccuti, I.' compcns..itiun structures 

contrihutc In hisses in the Deposit Insurance Fund. lhcsl.' arguments secm mcritlcss. In light 1lt" 

rcccnt hislc1ry. trusting the Fed to rein in hank.:r p.i,:. is likc asking :111 .1rsl111is1 t,1 guurd the 

urmury. I lis argument that there is --no e\"idcnec" compensation structures contribute to 

ins1i1u1io11al risk might ha,·e cre<libility if his own ag.1.:111.:y hud shm1n uny intcr.:sl al all in 

slcmming th1.: ·epidemic or mortg..igc fraud· that the 1-'lil noted m; e.irly .is 2004. As is. his 

.irgu1m:nts simply justi(v the continw:d lo11ting of large b,mks by their 1.:.xccu1i,cs. 

Our consti111cn1s arl' demanding action. nol idli: cha11cr. 111 Congress. wear~· 1.kha1ing what -.1cps 

lo tuli.c. In the ml!:mtime, \\c appreciate outstanding judgment that Chain\oman 13.iir. \'i1:c 

Chainm111 \.ltirtin Urucnbcrg. and l"homas Curr~ hu1 c shuwn in c:1rr~ in~ Olll thcir duty 111 the 

puhli1:. 

Rl:g.Jrtls. 
------
(b )(2) 

(b)(2) 

@ FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, oc 20429 

SHEILA C. BAIR 

CHAIRMAN 

I lonorablc Michael E. Capuano 

House of Representatives 

Washington, D.C. 20515 

Dear Congressman Capuano: 

March 2, 20 I 0 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We apprc~iatc for yOL.ir intrr7s1 intbis imotant issue. If you have any qucs_tions, 

please do not hcsnatc lo c,]I me ,L,-· -. --- r Paul Nash, Deputy to the Cha,mian 

for External Affairs at •···· •· •-·· / 

Sincerely, 

Sheila C. Bair 
(b)(2) 

(b )(2) 

'9 FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, oc 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable William Lacy Clay 

House of Representatives 

Washington, D.C. 205 l 5 

Dear Congressman Clay: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your interest in this im )ortant issue. If you have any questions, 

please do not hesitate to call n1e at r Paul Nash, Deputy to the Chairman 

for External Affairs at ·--

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b )(2) 

e FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable .John Conyer 

House or Representatives 

Washington, D.C. 20515 

Dear Congressman Conyer: 

March 2, 20 I 0 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we ,vi!! carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your intcces.t io tbi". imoJtanl issue. If you have any questions, 

please do not hesitater cal! me at k'-;- . .,-'j\ >, Pau I Nash, Deputy lo the Chai ,man 

for ExtcrnalAffa1rs at ..... ~•-···"·"'"· I 

Sincerely, 

Sheila C. Bair 
(b)(2) 

(b)(2) 

ti) FEDERAL DEPOSIT INSURANCE CORPORATION, Washington. DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Lloyd Doggell 

House of Representatives 

Washington, D.C. 205 I 5 

Dear Congressman Doggett: 

March 2, 20 I 0 

Thank you for your letter conceming the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

!-'--"-..,._,..u....&.......,,..L.I.L..,.., 111,1,, rtant issue. If you have any questions, 

n~~imit-7""""'.".JL-...2:2~:.;'.;.:..::1:'._,:: or Paul Nash, Deputy to the Chairman 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b)(2) 

e FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Keith Ellison 

House or Representatives 

Washington, D.C. 20515 

Dear Congressman Ellison: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your interest in this im ortant issue. If you have any questions, 

please do not hesitate tf--C.a.u.~.:.caic:.7 ::._::~..;;._~ r Paul Nash, Deputy to the Chairman 

for External Affairs at 

Sincerely, 

Sheila C. Bair 
(b)(2) 

(b )(2) 

- FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Bob Filncr 

I louse of Representatives 

Washington, D.C. 20515 

Dear Congressman Fi Iner: 

March 2, 2010 

Thank you for your letter concerning the f.ederal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

1-'-,==-'-~=-=-=....:.:..:.=-=.ortant issue. If you have any questions, 

rc...;:.;:..:....:..:..:..:;....cc.'-'------"i-....:_"'--_J r Paul Nash, Deputy to the Chairman 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b )(2) 

@ FEDERAL DEPOSIT INSURANCE CORPORATION, Washing1on, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Alan Grayson 

House of Representatives 

Washington, D.C. 20515 

Dear Congressman Grayson: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed lo account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your inte~L...U.WJ.J.J..>-JCI.L.I.LJJ./rtant issue. If you have any questions, 

please do not hesitate to call me at ~- or Paul Nash, Deputy to the Chainnan 

forExternal Affairs al -

Sincerely, 

Sheila C. Bair 
(b)(2) 

(b)(2) 

e FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Luis V. Gutierrez 

House of Rcprcscntati ves 

Washington, D.C. 20515 

Dear Congressman Gutierrez: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your intc.rre=s""': -t-""-..,_,_.,.;;,,,;-:..,_,,o;;;;rtanl issue. If you have any questions, 

.. pkase do-not hesitate ·· 1 · ·· t r Paul Nash, Deputy lo the Chairman 

for External Affairs a 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b )(2) 

- FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Marcy Kaptur 

House of Representatives 

Washington, D.C. 20515 

Dear Congresswoman Kaptur: 

March 2, 20 I 0 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your intl'-'--"'....._........._.......,....!.1.L1'-"'->;ortant issue. If you have any questions, 

please do not hesitate to call me a or Paul Nash, Deputy to the Chaimian 

for External Affairs at-,--~_-____ _, 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b )(2) 

@ FEDERAL DEPOSIT INSURANCE CORPORATION, Washington. DC 20429 

SHEILA C BAIR 

CHAIRMAN 

Honorable Eric J.J. Massa 

House of Representatives 

Washington, D.C. 20515 

Dear Congressman Massa: 

March 2, 20 I 0 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking 011 this important matter. 

We appreciate for your int n his innortant issue. If you have any questions, 

please do not hesitate t,o_e_a_l_l 1_n_c_a...._--+. ____ _,or Paul Nash, Deputy to the Chairman 

for External Affairs at 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b)(2) 

$ FEDERAL DEPOSIT INSURANCE CORPORATION, Washington. DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Brad Shennan 

House of Representatives 

Washington, D.C. 20515 

Dear Congressman Sherman: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

l'-'--",._._."-'--'"-'-'-"'--!.!.!.~ortant issue. If you have any questions, 

c~:._.:..:..:-:,,.:::"'-,--.,......-,-'-'-'-----lor Paul Nash, Deputy to the Chairman 

Sincerely, 

Sheila C. Bair 
(Ii FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C BAIR 

CHAIRMAN 

Honorable Jackie Speier 

House of Representatives 

Washington, D.C. 20515 

Dear Congresswoman Speier: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by certain employee compensation 

programs. 1 assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

please do We not appre~iatc hesitate ra .,fi. o .. ··r··•.y·.··•o·•·•·•···L···• qi] me .. ,.r .. ·•.··.·.•··.i• ..1 at;~' ..... t~.·.·.'.r.•.· ... /4 .... ·.••··.s .. ··•··; ~;~ .iy th.is > .·• inrnj. or rtant Paul issue. Nash, If Deputy you have to any the ques_tions, Cha1m1an 

for External Affairs a~~·""••.:+, · >/. 

Sincerely, 

Sheila C. Bair 
(b )(2) 

(b)(2) 

@ FEDERAL DEPOSIT INSURANCE CORPORATION, Washington, DC 20429 

SHEILA C. BAIR 

CHAIRMAN 

Honorable Pete Stark 

House of Representatives 

Washington, D.C. 20515 

Dear Congressman Stark: 

March 2, 2010 

Thank you for your letter concerning the Federal Deposit Insurance Corporation's 

request for comments on how the FDIC's risk-based deposit insurance assessment system 

could be changed to account for the risks posed by ce11ain employee compensation 

programs. I assure you we will carefully consider your concerns as we develop our 

thinking on this important matter. 

We appreciate for your interest in this im ortant issue. If you have any questions, 

please do not hesitate ~C.U,Lw~Lt::7 =.:_~_j r Paul Nash, Deputy to the Chaim,an 

for External Affairs a '----'------l 

Sincerely, 

Sheila C. Bair