The Wall Street Journal this morning reports that as Wal-Mart awaits word from the Federal Deposit Insurance Corporation (FDIC) about whether its application for a banking license will be approved, several states “are considering legislation that would bar the retail giant from opening company-owned bank branches within their borders.”
Legislatures in Colorado, Kansas, Maine, Nebraska and Texas are all considering such bills.
At the moment, the FDIC has postponed making any decisions on the Wal-Mart application, though it has promised to start its deliberative process at the end of the month. The Journal notes that at that time “the FDIC could vote to move ahead on the application, extend the existing moratorium, or revise the process for evaluating bids.”
The FDIC has been under a lot of pressure from the traditional financial services industry to deny Wal-Mart’s bid to open a bank. While Wal-Mart has said that it would only use the bank to lower its transaction fees on credit card and debit card purchases, there is considerable concern that it would be a lot more aggressive in applying its “always low prices” model to financial services, though the banks have only said that a retailer the size of Wal-Mart should not be allowed to be in the bank business.
Legislatures in Colorado, Kansas, Maine, Nebraska and Texas are all considering such bills.
At the moment, the FDIC has postponed making any decisions on the Wal-Mart application, though it has promised to start its deliberative process at the end of the month. The Journal notes that at that time “the FDIC could vote to move ahead on the application, extend the existing moratorium, or revise the process for evaluating bids.”
The FDIC has been under a lot of pressure from the traditional financial services industry to deny Wal-Mart’s bid to open a bank. While Wal-Mart has said that it would only use the bank to lower its transaction fees on credit card and debit card purchases, there is considerable concern that it would be a lot more aggressive in applying its “always low prices” model to financial services, though the banks have only said that a retailer the size of Wal-Mart should not be allowed to be in the bank business.
- KC's View:
- We have friends in the banking business who don’t agree with us, but we continue to feel that there is no reason that the financial services industry should be spared the headaches and heartaches that everybody else has suffered when Wal-Mart has gotten into their industries. Plenty of pain to go around, and we actually think that a little healthy competition might be good for the banks.
