FDIC puts six-month halt on approvals of industrial banks

WASHINGTON — Federal bank regulators voted Friday to halt for six months any new approvals of the sort of industrial banks that Wal-Mart, Home Depot and 12 other companies are seeking to establish.

The directors of the Federal Deposit Insurance Corp. made decision to impose the six-month moratorium on approving applications for the so-called industrial loan corporations, or ILCs. Nearly 100 members of Congress from both parties recently asked the FDIC to put into effect such a halt to give lawmakers a chance to consider legislation that would block commercial companies from owning ILCs.

The FDIC will not make any final decisions on applications for the banks or for changes in control of existing banks and will not accept any new applications for six months, the agency said in a news release.

"Recently, the growth of the ILC industry, the trend toward commercial company ownership of ILCs and the nature of some ILC business models have raised questions about the risks of ILCs to the deposit insurance fund, and whether their commercial relationships pose any safety and soundness risks," the FDIC said.

The application of Wal-Mart Stores Inc., the world's largest retailer, to establish an ILC in Utah has spurred opposition from banks, unions, lawmakers, and consumer and community organizations.

Wal-Mart insists that it has no plans to compete with community banks and has pledged to the FDIC to stay out of branch banking and consumer lending. Rather, the newly-chartered bank would be used to handle the 140 million credit, debit card and electronic check payments it processes each year, the company says.