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Outgoing Federal Reserve Chairman Alan Greenspan has sent a letter to the US Congress opposing efforts by Wal-Mart to open a bank, according to a story this morning in the Wall Street Journal.

However, it is unknown whether “incoming Fed Chairman Ben Bernanke would endorse every word of Mr. Greenspan's comments,” the Journal reports.

Analysts say that the Fed may oppose a Wal-Mart bank mostly because the retailer could dramatically challenge the current financial services balance of power by bringing its “always low prices” approach to banking.

Wal-Mart says it wants to open a bank so it can handle its own credit card and debit card transactions and save millions in fees currently being charged by other banks, though critics are convinced it wants to get into the broader financial services business.

As reported here on MNB, the Federal Deposit Insurance Corporation (FDIC) expects to hold a public hearing before deciding on whether or not Wal-Mart should be allowed to open a bank. However, the FDIC also expects to delay any hearings or action until an FDIC board vacancy is filled.
KC's View:
The banking business should be afraid of Wal-Mart. Very afraid.