Bank of Wal-Mart?
In its latest bid for world domination, Arkansas-based Wal-Mart has announced it plans to open a financial services arm. The bank, headquartered in Utah as an industrial charter bank (ILC), would offer credit and debit cards to help grease sales at Wal-Mart stores -- talk about synergy -- but could expand into mortgages and loans.
Wal-Mart Watch offers more background:
ILC's are industrial charter banks, a throw-back to the days before the great market crash of 1929 when banking regulations were few. Utah is one of a very few states that still charters such institutions. The state also receives an estimated 40% of its receipts from such banks.
This is Wal-Mart's forth attempt to break down the federal and state laws that prevent them from expanding into consumer banking services such as credit cards, mortgages and loans. They've tried in Oklahoma, California and even in Toronto, Canada.
The move has provoked widespread concern:
The move is opposed by a wide range of business, labor, and banking groups, including the Independent Community Bankers of America, which argues that mixing retail and banking "would produce an excessive concentration of economic power" and "jeopardize the impartial allocation of credit."
The Federal Deposit Insurance Corporation (FDIC) is hearing public comment on Wal-Mart's bank bid until Thursday, August 18. If you'd like to weigh in, visit here.
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Chris Kromm
Chris Kromm is executive director of the Institute for Southern Studies and publisher of the Institute's online magazine, Facing South.