Wal-Mart Stores Inc. would have to abandon its bid to operate a bank under the provisions of a bill introduced Monday in Congress.

But Utah's top bank regulator says the legislation simply isn't justified.

The bill proposed by U.S. Representatives Barney Frank and Paul Gillmor would:

• Ban "commercial" firms from operating industrial banks, with the exception of some grandfathered institutions.

• Require industrial bank holding companies to register with the FDIC and be supervised in much the same way holding companies are supervised by the Federal Reserve.

• Restrict some industrial banks' business plans and stop current industrial banks from expanding their services, i.e. branching.

The Massachusetts Democrat and Ohio Republican are the senior members of the House Committee on Financial Services, which has scheduled hearings on the bill for Wednesday.

Wal-Mart and Home Depot Inc. are among 13 non-financial companies with bank applications pending, Frank and Gillmor say. Opponents say companies that operate their own banks, known as industrial banks or industrial loan corporations, can't make disinterested lending decisions.

"There is ambiguity in banking policy, and retailers are exploiting a loophole," said Steve Adamske, a spokesman for Frank.

In Wal-Mart's case, banks fear the world's largest retailer would eventually open branches, threatening smaller competitors.

Wal-Mart has said it does not intend to get into retail banking and wants to use its bank to save on fees it now pays to third parties to process credit-card, debit-card and check transactions.

"On behalf of its customers, Wal-Mart would be very disappointed if Congress eliminated its ability to obtain an ILC charter," spokeswoman Tara Raddohl said in an e-mail message Monday.

The retailer applied a year ago to operate a bank in Utah to process credit-card and debit-card payments. As of late Monday, the Utah Department of Financial Institutions had not yet accepted its application as complete.

But Wal-Mart's bid generated a record 4,000 comment letters to the Federal Deposit Insurance Corp., which also is still considering whether to grant deposit insurance. That prompted the FDIC in April to hold its first-ever public hearings on a bank application.

"The purpose we're all very concerned about is do they really want to get into retail banking," said Steve Verdier, director of congressional affairs for the Independent Community Bankers of America in Washington.

Home Depot in May agreed to buy EnerBank USA to expand services to professional builders. EnerBank makes loans for home-improvement projects. It doesn't have branches, instead making its loans over the phone.