News Roundup: Wal-Mart Ends Attempt To Start Bank

From MarketWatch:

Wal-Mart Stores Inc., facing a wall of opposition from the banking industry, Congress and activist groups, said Friday it would withdraw its application to start a specialized bank. Wal-Mart said it made the decision because a move by federal regulators to extend a moratorium on new applications for the type of bank it sought to start, known as an industrial loan corporations (ILC), would mean approval of its request would take years instead of a few months as initially expected.

From the Washington Post:

The firestorm over Wal-Mart’s banking ambitions began in July 2005 when the Bentonville, Ark., company filed its application with the FDIC. Banks not associated with the company already have branches inside Wal-Mart stores, but critics saw the application as a first step toward taking over a large chunk of the retail banking business.

Wal-Mart Watch, a union-funded group that often criticizes the company’s wages, benefits and business practices, alleged that the chain was determined to make payday loans, for example, to financially vulnerable Americans.

From the Arkansas Democrat Gazette:

“Wal-Mart made a wise choice,” said Sheila Bair, chairman of the Federal Deposit Insurance Corp. “This decision will remove the controversy surrounding their intentions,” she said in a statement. “They don’t need an ILC to play an important role in expanding access to financial services, they can do so by partnering with banks and others.”

From the Springdale (Ark.) Morning News:

Wal-Mart has denied it wants to get into commercial banking, but fears were raised again this week when Rep. Paul Gillmor, R-Ohio, a leader of congressional efforts to draw a strict line between commerce and banking, released a Wal-Mart e-mail detailing lease terms with banks that rent space for branches inside hundreds of Wal-Mart stores.

The lease terms in the e-mail said 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 Wal-Mart might develop.