Wal-Mart Bank Bid Backburnered
WASHINGTON – The FDIC dealt a near-fatal blow yesterday to the bid by Wal-Mart Stores for a bank charter when it voted to extend a moratorium for new industrial loan companies owned by commercial entities for another 12 months. The move left the two-year-old application for deposit insurance for the ratil giant’s ILC in limbo, as Congress begins its own deliberations on the ownership of banks by commercial entities like Wal-Mart, Home Depot and CMS Energy, all of which are trying to enter the market through ILCs, so-called back-door banks. In voting to extend the current six-month moratorium for another year the five members of the FDIC Board agreed to let wait until Congress leads the way on the historic mix of banking and commerce. Earlier this week, leading members of the House Financial Services Committee introduced legislation to permanently bar commercial entities like Wal-Mart from banking through ILCs. The stakes are huge for credit unions and banks, which not only fear competition from the retailer famous for undercutting competition, but also worry that Wal-Mart could replace the 1,300 branches they lease in Wal-Mart stores with its own branches. Even without the bank charter Wal-Mart has penetrated deep into the banking market with a variety of consumer loan products, credit cards and its own growing network of ATMs. The company also recently obtained a banking charter just south of the border, in Mexico.