WASHINGTON -- A bill that would bar retailers from owning savings and loans was moving toward final approval by Congress last week.
The Financial Modernization Act, which President Clinton has said he would sign, includes a provision that would keep retailers from thrift bank ownership, a measure that would quash the plans of Wal-Mart Stores, Bentonville, Ark., to buy a thrift in Oklahoma. The discount giant had plans to open branches of the bank in its stores.
In late June, Wal-Mart had applied to the Office of Thrift Supervision to acquire Federal BankCentre, Broken Arrow, Okla. The retailer said it was buying the thrift as a solution to the problem of attracting in-store banks in some of the remote, rural areas Wal-Mart serves.
A Wal-Mart official last week declined to discuss how the bill would affect the company's plans.
Jim Leach, R-Iowa, chairman of the House Banking Committee, told a meeting of independent bankers in July that he found the move of a company engaged in commerce into the realm of banking "troubling" and promised it would be stopped if Congress passed a financial services bill this session.
Overall, the Financial Modernization Act would lower barriers in the financial services industry but would erect a prohibition to ban businesses involved in commerce, like retailers, from buying thrifts. The ban originated in the Senate version of the bill. Late last week Congress was completing the task of approving a House/Senate Conference Committee version of the bill.
In addition to the ban, the bill also keeps existing commercial enterprises that own thrifts from selling them to other commercial enterprises. There are about 70 thrifts now in the hands of commercial businesses, including at least one food retailer, Ukrop's Super Markets, Richmond, Va.
Congress initially allowed retailers to get into the banking business as a way to help thrifts recover from the savings and loan crisis in the 1980s. Commercial enterprises were allowed to buy just one thrift, although they could open multiple branches.
