PayThink

The downgrading of the government to double-A-plus was not only correct but overdue. If anything, S&P should have taken Uncle Sam down to double-A-minus, given the deadlock over revenues and spending.

A firm we know needed a $20,000 letter of credit to extend its lease. So, it went in turn to the banks it uses, at each of which it maintains cash deposits well north of an order of magnitude larger than the letter of credit requested. Also, the firm has no debt and has annual revenues in the high seven figures. So, could it get the letter of credit renewed?

Notes from the World Council of Credit Unions' World CU Conference in Glasgow, Scotland, as well as some other points from across the pond ...

The banks and credit card companies have spent 50 years building a proprietary, locked-down system that handles roughly $2 trillion in credit card transactions and another $1.3 trillion in debit card transactions every year.

The downgrading of U.S. government debt by Standard & Poor's Friday evening is a grim milestone in the history of American finance—and one that will be parsed in excruciating detail in coming days—but the ultimate practical impact on financial institutions seems likely to be minimal in the short term. The reasons are many.

A Microsoft security tool that has been criticized for being too intrusive can be turned off by the very malware it was designed to fight.

The buzz word "duplicative" has been making the rounds lately, employed by watchdog groups and politicians to describe government programs which overlap and offer redundant services at taxpayer expense.

Except when empowered by exclusive legal standing — for instance, in marketing checking accounts — banks consistently fail in competing to sell financial services to consumers. The most dramatic example is wealth management, but there are many others.

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.