Wal-Mart Withdraws Application for Banking Charter

Mar 19, 2007 3:00 AM

BENTONVILLE, Ark. -- Caving in to an avalanche of criticism and governmental resistance, Wal-Mart Stores here on Friday withdrew its application for an industrial loan company charter, which would have allowed it to operate a banking entity. A spokeswoman for the retailer described the opposition to its latest attempt to get into banking as “a manufactured controversy.” But in a statement, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said, “Wal-Mart made a wise choice. This decision will remove the controversy surrounding their intentions.” FDIC had put off a decision to insure the Wal-Mart bank for a year, allowing time for legislators to debate the merits of industrial loan companies. Wal-Mart had said that it wanted this charter to process credit and debit card interchange fees, but critics worried that the company has designs on becoming a major player in the banking business. Reports this week that the retailer had revised lease agreements with tenant banks so it could offer banking products itself fueled the controversy and apparently led to the withdrawal. Wal-Mart also recently began operating banks in Mexico. Last month, Ben Bernanke, chairman of the Federal Reserve Board, said he agreed that retail firms should not become banks. -- Dan Alaimo