BankThink

Breaking News This Morning ...Fannie Mae Loses $2.9B in 2Q: The government-sponsored enterprise has asked the Treasury for another $5 billion of aid.

Recent regulatory developments in the U.S. and the U.K. attempt to reverse efforts to stamp out rating agencies. Their role must be trimmed back and banks must be encouraged to develop standardized methods of calculating risk and capital as a substitute for external ratings.

Banking has become a complicated business, and working with regulators and other outside parties such as auditors and shareholders makes it even more so. Management teams, especially directors, increasingly need simpler tools such as dashboard reports and guidelines rather than complex methodologies and models.

A former card-skimming thief has started a legitimate business that relies on other people getting arrested. He posts mug shots scraped from the websites of law enforcement agencies in the state.

Receiving Wide Coverage ...European Contagion: The papers report today that the continent's debt crisis is spreading from peripheral countries (Greece, Ireland and Portugal) to Italy and Spain. (Though we'd thought that the investment community had lumped all five together a while ago, given traders' use of the unflattering acronym PIIGS). According to a story in the Times, big banks in those two larger economies — namely Italy's UniCredit and Intesa, and the Spanish banks Santander and BBVA — own so many bonds from their home countries that the banks themselves are being weakened as the securities fall in value. These worries are making it more difficult for the banks to finance their own daily operations. Reflecting the dire situation, the European Central Bank announced this morning that it will hold interest rates steady after two recent rate hikes. The Journal's "Heard on the Street" column observes that central banks around the world are running out of levers they can pull to prevent deflation. Which is especially problematic given the move toward austere fiscal policies in the face of high debt levels. Wall Street Journal, New York Times, Washington Post

Congress has expressed deep concern about the regulatory control of banks, yet at the same time wants banks to aggressively finance business and economic growth.

One court in California says it may be identity theft if a person uses a stolen password to pose as someone else on Facebook.

Receiving Wide Coverage ...So, What Now? President Obama signed into law the compromise deal allowing the government to raise the federal debt ceiling, but economic fears persist. The U.S. stock market tanked for an eighth consecutive day, the longest down stretch since that scary period in '08. "Foreign investors and economic analysts see further action as crucial to restoring the United States' financial reputation," the Washington Post reports. "Critics in China and elsewhere warned that the initial debt-reduction package, which would cut about $1 trillion from agency budgets over the next decade, is too modest." ("China and elsewhere" - there's just something about that phrase …) The FT notes prominently that the price of gold, a classic hedge against bad times, hit another record high. And the Journal reports that central banks around the world (South Korea being the latest) are "ramping up their gold buying as they seek to diversify their reserves away from the dollar and other beleaguered currencies." (There's another one: "the dollar and other beleaguered …") Wall Street Journal, Washington Post, Financial Times

The dramatic exit of Dominique Strauss-Kahn from the International Monetary Fund and the selection of Christine Lagarde as the fund's new managing director have put the international spotlight on the process by which leadership of international financial bodies is determined.

There are few topics as easy to get into a friendly, if a bit heated, debate these days as "the future of branches" in banking. Many folks quickly compare branches to buggy whip factories and traditional bankers to Luddites. Others jump in and cite research or survey results that say customers still prefer to open accounts in branches, and that, by the way, branches are still profitable.