Wal Mar Wants to Rule the World ... Further Proof Below
BENTONVILLE, Ark. — Wal-Mart, ever looking for ways to expand its already huge empire, is asking the government for permission to move into an entirely different industry: running its own in-house bank.
The world's largest retailer will ask the Federal Deposit Insurance Corp. (FDIC) Monday for permission to open a bank that can process millions of checks and credit-card payments each month. The company says it's not interested in running a consumer bank as well, but some of its opponents still fear such a step could hurt local banks much like the mom-and-pop stores were during Wal-Mart's rapid expansion.
This is Wal-Mart's fourth bid at running a bank — and its request unleashed an unprecedented flood of comments to the FDIC. In response, the FDIC scheduled its first public hearings ever on a bank application.
"It's a landmark battle in both U.S. business and financial services history," said Jerry Comizio, a financial services lawyer for Thacher Proffitt & Wood in Washington, D.C., and a former senior attorney with the Securities and Exchange Commission.
Wal-Mart says consumers and retail banks have nothing to fear. It pledges to stay out of branch banking and says it will not provide consumer lending. About 300 institutions operate branches in 1,150 Wal-Mart stores and the company says it doesn't want to compete with them.
Wal-Mart says it can save money if allowed to operate an in-house bank to handle the 140 million credit, debit and electronic-check payments it handles each year. At present, it pays outside companies to handle those transactions.
This time, Wal-Mart is applying for a state charter to open a special type of bank called an industrial loan corporation (ILC) in Utah. The charter needs approval from the FDIC, which would supervise and insure its deposits. ILCs are not regulated by the Federal Reserve, which has oversight over traditional banks.
Concerns are twofold. One is the mixing of banking and commerce — parts of the economy that have traditionally been separate.
The other is concern that a Wal-Mart bank could swallow local banks with its national presence and deep pockets, outcompeting even large institutions such as Bank of America, Chase and Wachovia.
Federal Reserve officials also have weighed in to urge Congress to close a legal loophole that allows nonfinancial companies such as Wal-Mart to open industrial loan corporations.
The world's largest retailer will ask the Federal Deposit Insurance Corp. (FDIC) Monday for permission to open a bank that can process millions of checks and credit-card payments each month. The company says it's not interested in running a consumer bank as well, but some of its opponents still fear such a step could hurt local banks much like the mom-and-pop stores were during Wal-Mart's rapid expansion.
This is Wal-Mart's fourth bid at running a bank — and its request unleashed an unprecedented flood of comments to the FDIC. In response, the FDIC scheduled its first public hearings ever on a bank application.
"It's a landmark battle in both U.S. business and financial services history," said Jerry Comizio, a financial services lawyer for Thacher Proffitt & Wood in Washington, D.C., and a former senior attorney with the Securities and Exchange Commission.
Wal-Mart says consumers and retail banks have nothing to fear. It pledges to stay out of branch banking and says it will not provide consumer lending. About 300 institutions operate branches in 1,150 Wal-Mart stores and the company says it doesn't want to compete with them.
Wal-Mart says it can save money if allowed to operate an in-house bank to handle the 140 million credit, debit and electronic-check payments it handles each year. At present, it pays outside companies to handle those transactions.
This time, Wal-Mart is applying for a state charter to open a special type of bank called an industrial loan corporation (ILC) in Utah. The charter needs approval from the FDIC, which would supervise and insure its deposits. ILCs are not regulated by the Federal Reserve, which has oversight over traditional banks.
Concerns are twofold. One is the mixing of banking and commerce — parts of the economy that have traditionally been separate.
The other is concern that a Wal-Mart bank could swallow local banks with its national presence and deep pockets, outcompeting even large institutions such as Bank of America, Chase and Wachovia.
Federal Reserve officials also have weighed in to urge Congress to close a legal loophole that allows nonfinancial companies such as Wal-Mart to open industrial loan corporations.
posted by Bludlust at 10:23 AM
0 Comments:
Post a Comment
<< Home