Barrier to Wal-Mart bank?

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.

Industrial banks, which aren't regulated by the Federal Reserve, grew to more than $140 billion in assets in 2004 from $3.8 billion in 1987, according to a September 2005 report by the U.S. Government Accountability Office, the investigative arm of Congress.

Edward Leary, commissioner of the Utah Department of Financial Institutions, said Monday the industrial banks chartered in Utah are "well-regulated, well-run, and that existing regulatory constraints prevent abuses from holding companies (of those banks)."

"I don't believe there's justification for the bill," Leary said. "It is not necessary, and I don't believe the case can be made that there's a supervisory reason for it. There has been no industrial bank failure in Utah in 20 years."

Leary declined to speculate what effect the bill would have on Utah or its growing ILC market, except to say that "there would be an adverse effect, yes. What is not clear to me would be the extent of that effect."

Legislators and regulators including Federal Reserve Chairman Ben Bernanke have expressed concern about commercial companies owning banks.

"Congress has affirmed the principle of keeping banking and commerce separate," Bernanke told the community bankers' group in a March 8 speech in Las Vegas.

Under the terms of the bill, companies given approval after June 1 that don't derive at least 85 percent of their revenue from financial services would be required to divest their banks within two years. While companies granted a charter between Oct. 1, 2003, and June 1 wouldn't have to divest, they wouldn't be allowed to enter new banking businesses.

"There's likely to be a loud chorus of support for this bill," said Edward Yingling, president of the American Bankers Association in Washington, in a statement. "There is a large, diverse group of policy makers, businesses and consumer groups that strongly objects to having banks embedded in the world's largest commercial companies."