Wal-Mart Dropping Bid To Establish Bank
Friday, March 16th 2007, 10:52 am
By: News On 6
WASHINGTON (AP) _ Wal-Mart Stores Inc. is dropping its bid to establish a bank after months of heated debate over whether the world's largest retailer should be allowed to gain the added financial power of a federally insured bank.
Wal-Mart announced Friday that it was withdrawing its application for a bank charter.
The Federal Deposit Insurance Corp. was considering Wal-Mart's application to establish an industrial loan corporation, which is a limited-purpose bank for processing credit card and other payments.
The news came a day after details came to light of leases that Wal-Mart recently signed with banks that operate branches in hundreds of its stores, reserving the company's right to offer an array of future financial services in its stores. According to the lease terms, Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that the company might develop.
The chairman of the FDIC, Sheila Bair, said the Bentonville, Ark.-based company's move to withdraw its application for a bank charter was ``a wise choice.''
``This decision will remove the controversy surrounding their intentions,'' Bair said in a statement.
Wal-Mart does not need to have the sort of bank in question ``to play an important role in expanding access to financial services by partnering with banks and others,'' Bair said. ``We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations.''
Wal-Mart's application to establish an industrial loan corporation based in Utah had prompted a firestorm of opposition from banks, unions, lawmakers, and consumer and community organizations.
Last April, groups representing those interests argued against granting the retailer's request at two public hearings, the first ever held by the FDIC on such an application.
``Unlike dozens of prior ... applications, Wal-Mart's has been surrounded by manufactured controversy since it was submitted nearly two years ago,'' said Jane Thompson, president of Wal-Mart Financial Services. ``At no stage did we intend to use the (industrial loan corporation) to establish branch banking operations as critics have suggested _ we simply sought to reduce credit and debit card transaction costs.