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The Sacramento Business Journal reports that California Gov. Gray Davis has signed a bill closing the loophole that would have allowed Wal-Mart Stores to acquire a small Orange County bank.

While Wal-Mart has said that it wanted to own a bank in order to reduce its own transaction fees and satisfy internal demands, people in the banking industry objected to the acquisition on the grounds that it would violate the 1999 Gramm-Leach-Bliley Act.
KC's View:
Wal-Mart may have been prevented from owning a bank in California, but the company hasn’t gotten to where it is by accepting the judgments of higher authorities. It’ll find another state in which to own a bank, and it’ll do so. And then, we’ll watch as it begins an inexorable march toward domination of the financial services business.

This isn’t just idle speculation on our part. In our opinion, Wal-Mart’s tradition of high growth has created a kind of heroin to which Wall Street types have become hooked, and owning a bank -- which would allow it to both cut costs and build new services and sales -- would help it provide continuing fixes to the investment community.