Panel seeks Wal-Mart Bank delay

More than two dozen U.S. lawmakers asked the Federal Deposit Insurance Corp. on Friday to delay proceeding with Wal-Mart Bank's application for deposit insurance and to hold public hearings on the matter, citing "historic levels of public interest."

Twenty-five members of the House Committee on Financial Services — not including committee member Rep. Jim Matheson, D-Utah — signed a letter to acting FDIC Chairman Martin Gruenberg, asking that the FDIC defer any decision on Wal-Mart Bank's request until vacancies have been filled on the FDIC board of directors.

"This application is clearly of sufficient importance to require that it be made by the members of the FDIC board itself and only by a full board without vacancies," the letter states.

The letter also reiterated requests to the FDIC from the committee's ranking Democratic member, Barney Frank of Massachusetts, and Rep. Paul Gillmor, R-Ohio, to hold public hearings on the matter.

"As you know," the letter states, "this application has generated historic levels of interest, with the FDIC receiving more than 1,000 written comments."

Further, the letter continues, "Given the reluctance of the FDIC to release additional information concerning the nonpublic portion of Wal-Mart Bank's business plan and given the numerous requests for public hearings that the FDIC has received, hearings would clearly be in the public interest."

Wal-Mart Bank submitted its applications to the FDIC and the Utah Department of Financial Institutions (for an industrial bank charter) in July 2005. As of Friday, the Utah department said it had not yet accepted the bank's application as complete.

All the members of the financial services committee were given the opportunity to sign the letter. Matheson declined.

"I don't know that Congress should be getting involved in the specific application of an industrial loan company," Matheson said. "This industry is primarily Utah-based, creating 15,000 jobs in the state, and the Department of Financial Institutions under (Commissioner) Ed Leary has done a tremendous job regulating the industry. They have not had problems, historically, ever. And the FDIC has done a tremendous job as well. We ought to trust our system, regardless of the company."

However, in a statement released Friday afternoon, the Independent Community Bankers of America applauded the letter and reiterated its concerns that Wal-Mart Bank straddles the line between banking and commerce.

"Granting an application to Wal-Mart to start a bank erodes the long-established policy separating banks from commercial activity," David E. Hayes, ICBA chairman, said in the statement. "Debate on this crucial issue should be conducted in full public view."

Howard Headlee, president of the Utah Bankers Association, said Wal-Mart Bank's application "isn't even close (to being decided upon) right now," and also urged calm.

"This shouldn't be a concern right now, in that if the FDIC and Congress operate within their normal time frame, there should be a full panel by the time a decision is required on the application," he said.

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E-mail: jnii@desnews.com