BankThink

In the wake of the financial meltdown of 2008, an increasingly persistent attack on money market mutual funds is underway. Present and former high government officials, academics, and some editorial writers have joined the fray, each offering their own approach for reengineering the money fund industry.

The branch banking model is outdated, and not just because many still use pneumatic tubes at the drive-through lane.

Banks should adhere to high moral standards by discouraging people from going needlessly into debt. The concept of "fly now, pay later" does not promote consumers’ financial responsibility.

A cyberscam that profited by swapping out Web ads to generate referral revenue also left its victims open to more direct financial fraud.

Receiving Wide Coverage ...Unlucky Seven: Investors dumped Italian government bonds, pushing their yields up past 7% -- a "psychologically important" level - after LCH Clearnet, a clearing house for European repo trades, raised margin requirements for the debt. As the FT explains, 7% yields had previously "led to both Ireland and Portugal requesting emergency bail-out loans," and while Rome could handle borrowing costs at this level for a year or so, the concern is that these costs could get stuck in a self-reinforcing spiral. (Is that a redundant phrase? We can't decide.) Moreover, Italy's a lot bigger than those other two countries, so a full-blown financing crisis there could be a "game-changer," the FT says. Italy is "too big to bail," and an attempt to rescue it "would stretch the European financial stability facility, the eurozone rescue fund, to breaking point." The fear in the fixed-income market spread to the global stock markets, which tanked. But here comes the cavalry: this morning the FT reports Italian yields have dropped back below 7% following reports that the European Central Bank had intervened. European stock markets are calmer after Italy pulled off a successful debt sale this morning. Financial Times, Wall Street Journal, New York Times, Washington Post

The Volcker Rule, enacted as part of the Dodd-Frank Act in 2010, has lately received a lot of adverse commentary. The complexity of the draft implementing regulation, and the clear indication in the regulators' accompanying questions that they did not know how to make the rule work, has produced a new round of criticism. But that’s only one of the problems this rule creates, and a relatively minor one.

Sandra Fisher Martins will brook no lawyerly explanations for impenetrable, convoluted writing. People have a “right to understand,” she says in a recently posted TED video.

Overdraft elephants are hiding in plain sight in bank and credit union boardrooms. No one admits seeing them. No one talks about them. The less said the better.

There's bad news for those who withdrew funds on Bank Transfer Day to punish the targets of their ire. Most banks don't really need their money — at least not right now.

Receiving Wide Coverage ...Life and Debt: In this week's New Yorker, columnist James Surowiecki questions the meme that consumer deleveraging is the main reason the economic recovery's been so weak. For one thing, he notes, consumer spending has been rising for much of this year, albeit sluggishly, and nonmortgage borrowing has been climbing the last two years. Moreover, returning to the "unnaturally high" consumption levels of the bubble years is neither realistic nor desirable. The problem, Surowiecki argues, is not so much Americans' indebtedness - or their efforts to work off those debts - as they're feeling less wealthy after home prices and other investments cratered; incomes are scarcely rising fast enough to help in this regard. The upshot is that "dealing with the debt problem, or the housing crisis, is not the panacea for the economy that many have made it out to be. … We can't look to [consumers] to jump-start this recovery." While you're reconsidering widely held assumptions about personal indebtedness, check out anthropologist David Graeber's book "Debt: The First 5,000 Years." We can't claim to have read all 500 pages, so we're hardly in a position to "review" this sweeping history or evaluate Graeber's thesis, which challenges the idea that a monetary debt is a moral obligation rather than a mere negotiable promise. (Just so you know where he's coming from, Graeber has been active in the Occupy Wall Street movement and is credited with coining the "We are the 99 Percent" slogan.) But just by skipping around the chapters, we've learned some fascinating things. For example, we already knew from reading Chris Skinner's Financial Services Club blog that the Knights Templar pioneered modern banking. But from Graeber we learned that the Holy Grail itself was a symbol of the "purely abstract forms of value" that were emerging with checks and credit during the Middle Ages. (Or, rather, re-emerging; one of Graeber's central points is that virtual money and credit have been around for millennia, long predating coins or cash, and that the stuff about ancient bartering systems we all read in Econ 101 was baloney.) This gave us a new perspective on the use of "holy grail" as shorthand for "widely sought business goal" (a long-exhausted cliché that, we're a little embarrassed to report, has appeared in American Banker 11 times this year). Unfortunately, the copy of "Debt" on our desk is due back at the library Wednesday. This is one borrowing we do feel morally obliged to return to the lender - and one book we might actually buy.