Banking Not in Wal-Mart's Future
BENTONVILLE, Ark. -- After facing a multitude of opponents ranging from big banks to unions and other retailers, Wal-Mart abandoned its bid for a banking license late last week, stating that it would find an alternative to serve its customers' financial needs, The Associated Press reported.
The company withdrew its application filed to the Federal Deposit Insurance Corp. (FDIC) for a bank charter after calling the opposition "manufactured controversy," the report stated. This was Wal-Mart's fourth attempt since 1999 to open a bank after other endeavors in Oklahoma, California and Canada were stopped by regulators or lawmakers.
A day before the bid was cancelled, a Republican member of the House Financial Services Committee accused Wal-Mart of "a pattern of deception and dishonesty" about its banking intentions, the AP reported.
The company's most recent efforts concerned payment processing, not branch banking, Wal-Mart emphasized during the process. It claimed it wanted to open an industrial bank to potentially save millions of dollars it currently pays outside banks to process credit and debit card payments in stores. Supporters said it could reduce fees and costs for consumers and that the banking industry is in need of more competition.
However, opponents -- including big and small banks, unions, farmers, convenience store owners and realtors -- protested to the FDIC and Congress that the company was secretly planning to start branch banking, which would concentrate too much economic power in one company, the report stated.
"From this day forward, no one will ever doubt the power of our grassroots movement, the strength of our allies, and the commitment the American people have to change Wal-Mart and America for the better," said Chris Kofinis, spokesman for union-funded WakeUpWalMart.com.
"Given such a history, Wal-Mart should not be trusted with the power to control access to money and wealth, particularly for the most economically vulnerable groups in American society," said David Nassar, executive director for Wal-Mart Watch, another union-backed group.
Wal-Mart started thinking about dropping the bid in late January, after the FDIC extended a moratorium on all industrial bank applications while Congress debates new legislation on those charters, according to Jane Thompson, Wal-Mart's president of financial services.
"Our thought was, as we wanted to get a stronger message out to our customers in particular about new services, each time we do that we would be hit with what we called the manufactured controversy over 'we're going to ruin the banking system,'" Thompson told the AP.
"We said, 'it's just getting in our way. We need to put the application behind us,'" she added in a telephone interview.
Wal-Mart currently offers customers payroll check cashing, express bill payment, money orders, money transfers and Wal-Mart branded credit cards. New financial services and products will be released this year, Thompson said, while declining to be more specific.
Wal-Mart targets "underserved" consumers, many of them unable to afford the fees that traditional banks charge for basic services, or are unable to maintain minimum balances between paychecks. The company sees two to three million transactions a week for its existing financial services, she said.
The company withdrew its application filed to the Federal Deposit Insurance Corp. (FDIC) for a bank charter after calling the opposition "manufactured controversy," the report stated. This was Wal-Mart's fourth attempt since 1999 to open a bank after other endeavors in Oklahoma, California and Canada were stopped by regulators or lawmakers.
A day before the bid was cancelled, a Republican member of the House Financial Services Committee accused Wal-Mart of "a pattern of deception and dishonesty" about its banking intentions, the AP reported.
The company's most recent efforts concerned payment processing, not branch banking, Wal-Mart emphasized during the process. It claimed it wanted to open an industrial bank to potentially save millions of dollars it currently pays outside banks to process credit and debit card payments in stores. Supporters said it could reduce fees and costs for consumers and that the banking industry is in need of more competition.
However, opponents -- including big and small banks, unions, farmers, convenience store owners and realtors -- protested to the FDIC and Congress that the company was secretly planning to start branch banking, which would concentrate too much economic power in one company, the report stated.
"From this day forward, no one will ever doubt the power of our grassroots movement, the strength of our allies, and the commitment the American people have to change Wal-Mart and America for the better," said Chris Kofinis, spokesman for union-funded WakeUpWalMart.com.
"Given such a history, Wal-Mart should not be trusted with the power to control access to money and wealth, particularly for the most economically vulnerable groups in American society," said David Nassar, executive director for Wal-Mart Watch, another union-backed group.
Wal-Mart started thinking about dropping the bid in late January, after the FDIC extended a moratorium on all industrial bank applications while Congress debates new legislation on those charters, according to Jane Thompson, Wal-Mart's president of financial services.
"Our thought was, as we wanted to get a stronger message out to our customers in particular about new services, each time we do that we would be hit with what we called the manufactured controversy over 'we're going to ruin the banking system,'" Thompson told the AP.
"We said, 'it's just getting in our way. We need to put the application behind us,'" she added in a telephone interview.
Wal-Mart currently offers customers payroll check cashing, express bill payment, money orders, money transfers and Wal-Mart branded credit cards. New financial services and products will be released this year, Thompson said, while declining to be more specific.
Wal-Mart targets "underserved" consumers, many of them unable to afford the fees that traditional banks charge for basic services, or are unable to maintain minimum balances between paychecks. The company sees two to three million transactions a week for its existing financial services, she said.