Wal-Mart Bank scares legislators

Wal-Marts application for an industrial bank in the State of Utah, drew so much criticism that the Federal Deposit Insurance Corporation is holding a special hearing on the issue in Washington on April 10 and 11, and another hearing, to be held in Kansas City, Mo., on April 25 and 26 at the request primarily of U.S. Senator Hillary Clinton. Last Friday, two lawmakers introduced bills to restrict Wal-Mart Stores' plans for banking operations in their states.

Rep. John Gleason of Michigan, a Democrat, proposed a bill Friday that would bar industrial banks like one Wal-Mart is seeking to start. State Delegate Brian Moe in Maryland, also a Democrat, introduced legislation last week that would ban bank branches from Wal-Mart stores.

There is a move in Washington, D.C. to bring federal regulations and laws reportedly from intense opposition from community banks and groups to the company's application for an industrial bank charter.

"I'm really concerned that they're going to put the local community banks out of business," Gleason said in a statement to the press.

Wal-Mart would be joining the other 35 Industrial Loan Companies (ILC) located in Utah, which should be of interest as they have a “rental” and small “lease-to-own” program. As reported earlier, Marlin Leasing is seeking an industrial bank application in Utah.

The FDIC states the reasons for the two hearings is they are interested "...in obtaining the views of the general public, the financial services industry and other industry trade groups, public interest groups, state financial institution supervisors, other state authorities, and any other interested parties."

Wal-Mart has said it wants to process its own credit and debit applications by opening an industrial bank. Last fall, in reaction to criticism of the plan, the company pledged not to expand into branch banking, but lawmakers are questioning whether the federal government can permanently restrict the retailer from doing so.