Wal-Mart welcomes regulatory hearing

Wal-Mart Stores Inc. said Friday it welcomed plans by U.S. regulators to hold a public hearing on the retail giant's application to operate a bank, a move that has spawned an avalanche of public comment to regulators and opposition from some members of Congress.

The world's largest retailer applied last year to establish an "industrial bank" in Utah, which would allow it to process credit card, debit card and electronic check transactions from its retail locations.

The Federal Deposit Insurance Corp. said in a letter to U.S. House of Representatives members that it would hold a public hearing, which a bipartisan group of 25 lawmakers had urged the body to schedule after Wal-Mart's application drew more than 1,500 public comments to the FDIC.

No time has been set yet for the hearing, FDIC spokesman David Barr said.

Wal-Mart, based in Bentonville, Ark., said it looked forward to being able to explain in public why it wants a bank.

"We welcome the opportunity, during this hearing, to discuss the merits of our industrial bank application, which we feel meets all regulatory requirements," Wal-Mart spokesman Marty Heires said in a statement.

"We are also grateful for this chance to help the public understand the purpose for the bank and that many corporations, including Target, GM and Toyota, already operate industrial banks," Heires said.

Opponents fear the huge company, if allowed to operate a bank, would have an unfair advantage over smaller banks.

"Our concerns about mixing banking and commerce didn't begin with the Wal-Mart application; they were just amplified by it," Edward Yingling, president and CEO of the American Bankers Association, said in a statement. "The industrial loan charter represents a back door through which commercial firms are entering the banking business."

But Wal-Mart says it just wants to save costs by processing over 140 million annual credit card, debit card and check transactions that are now handled for a fee by third parties.

Wal-Mart would not set up branch banks and would not provide lending of any type, it has said.

Industrial banks, also known as industrial loan corporations or ILCs, are found in only a few states. They operate like banks with federal deposit insurance and can issue credit cards, take deposits and make loans.

About the only thing an ILC cannot do is offer standard checking accounts if its assets exceed $100 million.

Wal-Mart's application with the Utah Department of Financial Institutions follows five years of attempts to get into banking. Previous plans to buy financial institutions in California, Oklahoma and to partner with a bank in Canada were unsuccessful.