Wal-Mart Ends Bank Bid, CUs open more in-store branches

WASHINGTON - Seeking to put another controversy behind it, Wal-Mart Stores withdrew its application for a U.S. bank charter. The company, embroiled in numerous fights over its labor practices, made the decision after the FDIC decided last month to extend its moratorium on all new industrial loan company charters-the kind of bank charter the retail giant was seeking-for another year.

Wal-Mart, which is building a retail bank branch network in Mexico, insisted throughout it has no plans to develop its own branch network in the U.S., but wanted access to the Federal Reserve payments system in order to process its own transactions at significant cost-savings.

Critics, led by the nation's community bankers, worried the company had future plans to kick out the 300 banks and credit unions operating 1,300 branches in Wal-Mart stores and establish its own retail banking operation. Their worries were fueled by Wal-Mart's continued expansion into financial services, as the company has created one of the nation's biggest check cashing networks, has expanded its credit cards operations, and is building its own ATM network.

The decision to pull its bank application comes as five credit unions are opening in-store branches in Wal-Mart stores this month, Service CU, Granite CU, Desert Schools FCU, Members CU and Members Alliance CU.

Meantime, lawmakers said they plan to continue their pursuit of a bill that would permanently bar non-financial companies, like Wal-Mart, from operating ILCs and other bank charters. Several non-financial companies, including Home Depot and DaimlerChrysler, have ILC charter applications pending before the FDIC.