News For Elected Officials: Better Health Care Together

On Wednesday, Wal-Mart CEO Lee Scott and Andy Stern, president of the Service Employees International Union, sat just a few scant feet from each other as the announcement was made that leaders from business and labor were teaming up to tackle America’s health care crisis.

Criticism of Wal-Mart’s health care coverage has come from all sides, including here at Wal-Mart Watch. With medical costs soaring, states such as New York and Maryland have passed legislation specifically to force companies such as Wal-Mart to spend more on health care. Maryland’s Fair Share Health Care Legislation (PDF) was even nicknamed the “Wal-Mart bill.”

This unlikely alliance, as it has been called, shows if nothing else the concern of business, labor and lawmakers over the rising costs of health care. With businesses such as Wal-Mart unwilling to increase spending on health care, the burden has increasingly been shifted to taxpayers, and many state-funded health care programs are feeling the pinch. This alliance could be a first step towards alleviating some of that pressure.

Wal-Mart, Union Join Forces on Health Care [Washington Post]
Two once-implacable foes in the business world found common ground yesterday, at least for a few minutes, as they publicly pledged to work together for the first time to fix what they called the nation’s health-care crisis by 2012.
Click here to read Wal-Mart Watch’s statement on "Better Health Care Together"
Click here to learn more about the high cost of Wal-Mart’s health care.

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Posted by Corey Himrod on Friday, February 09 | 6 comments | Permalink

Friday Blog Roundup: FDIC Extends Bank Moratorium

FDIC Extends Moratorium On Bank Of Wal-Mart

Bank Lawyer’s Blog: Moratorium on ILCs Extended
To the surprise of apparently no one...the FDIC extended for one year the moratorium on applications to start or gain control of ILCs by commercial companies. Applications filed by financial companies will be considered. That means that four of the current nine pending applications are on hold for at least another year or until Congress acts to bar such acquisitions entirely, whichever comes first.

Wal-Mart Cuts Taxes By Paying Itself Rent

Wal-Mart Watch: Taxes, Taxes Everywhere And Not A Dime To Spend
The revelation earlier today in the Wall Street Journal that Wal-Mart is, yes, taking advantage of state tax loopholes to save itself millions shouldn’t necessarily come as a surprise. But again, because of its sheer size, it’s the amount of money that should be going to fund state highways, fire departments, police and the like that is instead going directly back into Wal-Mart’s pockets that is troubling, and why states need to take a closer look at their tax laws and the behavior of companies like Wal-Mart.
BloggingStocks: Wal-mart pays itself rent—and cuts its taxes
Svelte tax strategies are the focus of many an accounting office in large corporations these days. Saving millions (or hundreds of millions) of dollars in taxes makes a team of tax attorneys a very wise investment for most companies.

So, it comes as no surprise that the world’s biggest retailer—Wal-Mart Stores Inc. --- has one of the more clever tax strategies I’ve seen in a while
ataxingmatter: Wal-Mart: low prices, low wages, and very low taxes of the tax law
My scholarship has focused, one way or another, on compliance issues--corporations that manipulate their income to avoid tax liability, practitioners who promote aggressive shelters and those who "customize" tax-motivated transactions for their clients. I am concerned that big corporations, and the tax practitioners that assist them in structuring their transactions, have so thoroughly adopted the "tax minimization norm" that they have lost sight of their responsibilities to comply with the tax law--including, I would say, with the spirit of the tax law.

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Posted by Russ Fagaly on Friday, February 02 | 16 comments | Permalink

FDIC Extends Banking Moratorium

From the Salt Lake City Tribune:

Wal-Mart Stores Inc. is going to have to wait a while longer before it finds out if it can own and open a Utah-based industrial bank. The Federal Deposit Insurance Corp. on Wednesday extended for another year its moratorium on granting deposit insurance for industrial banks owned by retailers and other commercial entities - a move that should give Congress time to consider the issue in more depth.

From the Atlanta Journal-Constitution:

On Monday, House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep. Paul Gillmor (R-Ohio) introduced a bill to more strictly limit banking to financial companies. Frank said in a statement that the FDIC moratorium “gives us the ability to legislate and maintain the historical and necessary separation between banking and commerce.”

Since the Great Depression, Congress has generally restricted banking to financial, rather than commercial, companies. But since 1987, it has allowed commercial companies to own limited-service industrial loan companies. State-chartered ILCs were exempted from heavy federal regulation so they could focus on helping low-income industrial workers get small loans.

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Posted by Russ Fagaly on Thursday, February 01 | 17 comments | Permalink

FT: US regulators to extend block on Wal-Mart bank

From the Financial Times:

Federal regulators are expected to agree today to extend a moratorium that has blocked controversial bids by Wal-Mart and Home Depot, the largest US retailers, to establish their own banks.

The Federal Deposit Insurance Corporation, which is responsible for supervising about 60 state-chartered industrial banks, announced a six-month freeze on approving new licences last July, citing the need for more debate over the issue.

It is now expected to extend the freeze on licence applications from commercial companies by a further 12 months, giving the new Democrat-led Congress an opportunity to pass legislation that would tighten restrictions on ownership of the banks.

Wal-Mart’s application to open an industrial bank in Utah in 2005 sparked bitter opposition from the banking industry and from the retailer’s political opponents who argue that such banks undermine federal laws that seek to separate banking and commerce.

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Posted by Russ Fagaly on Wednesday, January 31 | 0 comments | Permalink

Wal-Mart Bank Bill Introduced In Congress

From Reuters:

The top Democrat and Republican on the U.S. House Financial Services Committee on Monday introduced a bill that would ban Wal-Mart and other commercial companies from owning a type of bank known as an industrial loan company (ILC).

The bill was co-sponsored by Barney Frank of Massachusetts, a Democrat who is chairman of the panel, and Paul Gillmor of Ohio, the ranking Republican.

“We are seeking to prevent the expansion of a historically small special niche into a full-fledged alternative banking system, which dissolves the line between banking and commerce,” Frank said in a statement.

The legislation came just two days before the Federal Deposit Insurance Corporation holds a meeting to decide whether to extend a six-month moratorium on ILC applications. Banking experts generally expect the FDIC to keep the freeze in place for applications by commercial firms while Congress debates legislation.

The House bill, called the Industrial Bank Holding Company Act of 2007, prohibits a company from owning an ILC unless it generates at least 85 percent of its revenue from activities that are financial in nature.

Click here to learn more about the Bank of Wal-Mart.

Posted by Russ Fagaly on Monday, January 29 | 21 comments | Permalink

AJC: FDIC To Hear Plea By Wal-Mart

From the Atlanta Journal-Constitution:

The federal agency that insures bank deposits is expected to decide this week whether Wal-Mart Stores can move ahead with its plan to open a bank.

Wal-Mart critics want the Federal Deposit Insurance Corp.’s board, which meets Wednesday, to deny the retailer’s application for a type of bank known as an industrial loan company, or ILC.

Since the Great Depression, Congress has kept commercial companies out of the highly regulated banking industry. But ILCs are an exception. These limited-service banks can be owned by commercial companies, such as retailers, and are free to make loans and take deposits insured by the taxpayers.

Critics argue that if the FDIC board can’t find legal reasons to reject Wal-Mart’s ILC application, it should extend an expiring moratorium on new ILCs. Renewing the six-month ban would give the Democratic-controlled Congress time to pass legislation to block nonfinancial companies from expanding into banking.

About a dozen other consumer-oriented companies also are seeking FDIC approval for ILC applications. For example, Home Depot wants to buy an existing bank, EnerBank USA, to offer home improvement loans.

Opponents fear big retailers will squeeze out community banks. But none of the other applications has stirred the same level of opposition as the one by Wal-Mart, the world’s largest retailer.

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Posted by Russ Fagaly on Monday, January 29 | 1 comments | Permalink

Lawmakers To Consider Another Anti-Wal-Mart Bank Measure

From the Denver Business Journal:

Colorado lawmakers this week will consider a second piece of proposed legislation aimed at limiting the ability of giant retailers, such as Wal-Mart, from entering the banking business.

House Bill 1175, sponsored by Rep. Alice Madden, D-Boulder, Rep. Rob Witwer, R-Golden, Sen. Joan Fitz-Gerald, D-Golden, and Sen. Kenneth Kester, R-Las Animas, was introduced Jan. 18 and assigned to the House Business Affairs and Labor Committee. The committee will consider the bill on Jan. 25.

The bill would forbid an industrial bank from accepting deposits or making loans at a commercial location unless the industrial bank is owned by a financial holding company.

It takes a slightly different approach to the issue than Senate Bill 40, sponsored by Sen. Lois Tochtrop, D-Westminster, and Rep. Rosemary Marshall, D-Denver. That bill would prevent a business from running a bank within one-and-a-half miles of its own retail or commercial premises.

SB40 passed the Senate on a third reading Monday and now goes to the House.

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Posted by Russ Fagaly on Tuesday, January 23 | 0 comments | Permalink