Wal-Mart is deceptive, lawmaker says

Wal-Mart Stores Inc.'s new leases with bank-branch tenants are "a smoking gun" that Congress should weigh as it considers a bill to ban the world's largest retailer from operating a bank, a lawmaker said.

"Wal-Mart's attempts to own a bank run opposite of their statements to Congress," U.S. Rep. Paul Gillmor, a senior member of the House Financial Services Committee, said at a news conference on Capitol Hill Thursday. "They demonstrate a clear pattern of deception."

Gillmor, who backs a bill to bar new nonfinancial companies from operating banks, cited an e-mail from Wal-Mart to its bank tenants that gave the retailer the right to make home-equity loans, install automated-teller machines and offer other financial services.

"We've had similar language in our leases for the past five years," spokesman Kevin Gardner said in an interview Thursday. "No one should be surprised that we're interested in financial services, because we already have quite a few in our stores."

Wal-Mart applied for permission to start a bank in Utah in July 2005, sparking opposition from banking groups who said the company may eventually open branches and dominate the industry. Wal-Mart says it only wants the charter to process credit-card payments more efficiently, not to open its own branches.

"If this were a trial, we could convict Wal-Mart on circumstantial evidence alone," said Camden Fine, president of the Independent Community Bankers of America, a Washington-based trade group that has opposed Wal-Mart's bank bid.

"What they want is full-service banking," he said, citing Wal-Mart's past efforts to enter banking, apply for federal deposit insurance and recent approval to operate a bank in its stores in Mexico.

Wal-Mart's three previous efforts to offer banking include attempts to buy a California bank in 2002 and an Oklahoma thrift in 1999.

The company can still offer financial services without opening its own branches, said Steve Verdier, an ICBA lobbyist.

The new leases list specific services Wal-Mart may offer, including mortgages, which would place the retailer in direct competition with commercial banks.

Gardner said the leases weren't related to its bid to open an industrial bank.

"The bank application was very clear — and very narrow in scope — that it would only sponsor credit- and debit-card transactions and save us the fees associated with those transactions," he said.