FDIC Stalls Wal-Mart Bid for Banking Entity

Feb 1, 2007 3:00 AM

WASHINGTON -- Dealing a blow to the hopes of Wal-Mart Stores, Bentonville, Ark., and Home Depot, Atlanta, to start banking entities, the Federal Deposit Insurance Corp. voted here yesterday to continue its moratorium on applications for deposit insurance and change in control notices for industrial loan companies that will be owned by commercial companies. This will allow Congress to consider legislation regulating ILCs. The moratorium does not apply to ILCs owned by financial companies, FDIC reported. There are now 61 ILCs, including one owned by Target Corp., Minneapolis, and Nordstrom, Seattle. Opposition to Wal-Mart‘s bid has been increasing with bills in the Congress, as well as many states. Most seek to keep the retailer from opening bank branches, but Wal-Mart has said it wants the ILC to save money on processing credit and debit interchange fees. Home Depot has said it wants to provide customers with home improvement loans. In one news report, Wal-Mart financial services President Jane Thompson said the retailer does not plan to drop its bid. "My hope is that we see this through. There's no evidence that these banks have had safety and soundness issues," she said. Meanwhile, Wakeupwalmart.com, Kansas City, issued a statement: “While the fight to stop a 'Wal-Mart Bank' will continue, the moratorium puts a significant roadblock in Wal-Mart's plan to monopolize the American consumer, and helps ensure, at least for now, that our nation's federal and state lawmakers will have the added time necessary to pass legislation that will prevent Wal-Mart from further jeopardizing our nation's economy.” -- Dan Alaimo