Wal-Mart drops bank request

[msgadget]

From Wire Reports Mar 25, 2006


Wal-Mart Stores Inc. dropped a request that its proposed bank be exempt from federal requirements for investing in low-income neighborhoods.

The discounter wrote a March 1 letter to the Federal Deposit Insurance Corp. confirming it would comply with the law, Wal-Mart spokesman Marty Heires said yesterday. The retailer had asked for the exemption because it doesn't plan for the bank to make loans.

Wal-Mart abandoned the request as it faces opposition from financial institutions and community groups to its application to start a bank.

The retailer wants a charter for a special type of bank based in Utah called an industrial loan corporation that would only process Wal-Mart's millions of credit and debit card and check transactions. The chain says it wants to save costs by keeping the processing fees now paid to third parties.

Opponents argue Wal-Mart will open branches in its more than 3,300 U.S. stores.

Doing so could put community banks out of business, they argue. The opponents also fear having branches inside its stores would concentrate too much economic power in a single company.

"We had always intended to support the community," Heires said.

Last week, Heires said the chain's application states "very clearly we have no intention of opening branches."

Chris Kofinis, communications director for WakeUpWalMart.com, a union-funded campaign group that opposes the banking plan, said his group does not believe Wal-Mart's pledge that it will only operate an in-house bank.

Instead, he said it will be just a toehold so Wal-Mart can expand into full-service banking later.

Other opponents, who will testify in two hearings next month by the Federal Deposit Insurance Corp., were unmoved by the change yesterday.

"It's crumbs," said John Taylor, president and chief executive of the National Community Reinvestment Coalition, which is scheduled to testify against the plan at the first FDIC hearing April 10 in Arlington, Va.

[benburch]

1. Wal-Mart need to be broken up.

One store at a time.

With axes.

[msgadget]

4. LOL! Yeah, but it's a popular, selfish business model

that no one in power is running away from.

[benburch]

8. Don't assume I am being rhetorical.

Only force will now avail us.

[msgadget]

13. Yep

but many are sipping soothing Moderate tea in the belief the right kind of help is coming. It isn't.

[Swamp Rat]

6. Yeah, starting with the one built on Tchoupitoulas St. in New Orleans

where they tore down the St. Thomas housing project, displacing lots of poor folk. We VOTED AGAINST the Wal-Mart being put in this historic area, but Wal-Mart used their muscle and financed a change of our local government (city counsel) and un-did the vote.

With axes and torches.

[napi21]

2. Ya know, this is a dumb idea for WM, unless they have an alterior

motive. YEARS ago, I was the acctg mgr for a fairly large retail chain. We made a deal with our Bank to enter all the data for our cr cd transactions and send them the tape with the info. They reduced our charges to less than 1% and we didn't need to go through all the compliance requirements of being a bank!

Unless they really have intentions of becoming a full service Bank, I think their nuts!

[msgadget]

7. Ding!

I can't even imagine what a Wally World full-service bank would be like but that's not the point. There's no such thing as a 'free market' wherever they've turned their attention. They are changing the landscape for labor, for business, for trade...

[Pugee]

10. Part of this if for bank charges

I read an article a few months ago about this and local prosecuting attorney offices were saying that some of them would loose thousands of dollars if they lost Wal-Mart customer bad check fees. Now, WM will charge the fees electronically, plus the cost of the check.

[napi21]

11. Right now, that's not what they're asking for. They "said" all they

want to do is process the cr. cards.

[Pugee]

12. The article above states

credit cards, debit card and check transactions.

Nationwide, they will make millions off returned check fees rather than them going to third parties, such as prosecuting attorneys.

[high density]

14. Yeah but Walmart was going to actually service the transactions

... so I imagine the savings would be greater than 1%. With the new Check 21 rules, it seems they could probably process checks with rather low overhead as well. Whether or not it would be cheaper than paying Bank of America a couple of cents for each check they deposit, I obviously don't know. There's a lot infrastructure that would need to be deployed to save a few cents here and there and lower float times.

As for full retail banking from Wal-Mart, I think that's a joke. The customer service level is just not there at Wal-Mart and I think that reason would keep most people (except a few "rate whores") away from "Wal-Mart Bank."

[napi21]

15. I guess I didn't state it right. We didn't SAVE 1%, we saved a lot

more than that! Our cr. card fees at the same bank at the time were almost 4%. We saved over 3% by entering the data ourselves.

Now, I doubt WM's rate is that high. Tthings have changed a lot in the cr. card business over the years. But with the # of stores they have, even 1/2% would be BIG bucks! Processing checks is another story. There's a lot of expensive equipment you have to buy to do that and still meet te clearing dealines. I still can't see this being woth it to them.

[FloridaPat]

3. Too much economic power in a company? Unlike Sears which has

Discover card.

Something smells. Not sure where. Thre is a company in Georgia called Total Systems which processes credit cards for the big banks. #1 credit card processing company in the US. Near as I can tell it's not a bank. (www.tsys.com). So if that's all Walmart wants to do, why doens't it just create a cc processing center or buy Tsys?

[donco6]

5. I smell BS.

Of COURSE they want to start a bank. This is just a smokescreen to continue on that path.

[Rabrrrrrr]

9. Anything that helps choke WalMart is okay by me!