In the book “The Case Against Wal-Mart,” we wrote about Sam Walton’s son, Jim, and the banking empire that Sam created, now called Arvest. Over the years, Wal-Mart has attempted several times to break into the banking business directly. The group Wal-Mart Watch, has issued another warning this week, urging citizens to tell the Federal Deposit Insurance Corporation that we don’t want Wal-Mart doing to the banking industry what the company has done to the food and department store industries. “Wal-Mart’s dream of huge banking profits again rests in the hands of the FDIC — and in yours,” writes Wal-Mart watch. “The safety and soundness of the American banking system could be rocked by a decision in Wal-Mart’s favor… Wal-Mart has long had its eyes set on consumer banking as the next great frontier. While ATMs, check cashing and other financial services are already available in most Wal-Mart stores, the real profits come when Wal-Mart can actually own the bank and start loaning money to its customers to spend in Wal-Mart stores. Gary Dymski, a professor of economics at the University of California Riverside, said Wal-Mart may be inclined to lend to low-income consumers so that they could use the money in Wal-Mart stores, even if there were doubts about their ability to repay the loans. He writes — “since a large proportion of these customers’ personal consumption expenditures are made at Wal-Mart, conflicts of interest between the financial and commercial arms of Wal-Mart’s operations may arise.” It is this combination of commerce and banking that is so troubling. CEO Lee Scott has estimated that as many as 27% of Wal-Mart customers don’t even have a checking account in their name. Wal-Mart’s previous attempts to own a bank have been rejected by California, Oklahoma, and Toronto, Canada in recent years. But now they’ve landed in Utah, one of the few states which grants Industrial Charter Banks. ILCs are throw-backs to the days before the 1929 stock market crash when banking regulations were few. It’s universally agreed that banking is one of Wal-Mart’s richest growth opportunities. But this isn’t just about standing in Wal-Mart’s way. This is about protecting key banking laws that protect working class Americans. This is about protecting yet another industry — and the millions of people who work in it – from Wal-Mart’s devastating takeover. The FDIC itself explained its decision to extend the public comment period by referencing the “excessive interest” generated from Wal-Mart’s application.”
For earlier stories on this topic, search Newsflash by “bank.” You can take action today by signing your name to the call for the FDIC to reject Wal-Mart’s application one more time – and help us spread the word far and wide. Go to http://www.walmartwatch.com/
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