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Wal-Mart's Banking Plans Draw Critics

March 13, 2006

Wal-Mart • General Complaints • Black Friday • Customer Service • Dangerous Products, Conditions • Grocery/SuperCenters • Lawn & Garden • Monogram Credit Card Bank • Pet Department • Pharmacy • Photos • Pricing Disputes, Errors • Returns • Sporting Goods • Tire & Lube • Vision Center • WalMart.com --- • Employees Complaints --- News • Wal-Mart Gaining On Grocery Chains • Black Friday Ads Target Wal-Mart • Wal-Mart Era Is Over, Wall Street Journal Declares • Consumers Respond to Toxic Wal-Mart Pet Toy Stories • Wal-Mart Expands $4 Generic Program • Lab Tests Find Lead, Other Toxins in Pet Toys Sold at Wal-Mart • Wal-Mart Plans Its Own Debit Card • Wal-Mart To Open In-Store Health Clinics • Wal-Mart Gives Up Bank Plans • Congressman Challenges Wal-Mart Banking Plans • Wal-Mart Expands Generic Drug Plan • Christmas Returns to Wal-Mart • Wal-Mart Jump-Starts the Holiday Shopping Season • Wal-Mart Cuts Generic Rx Prices To $4 In Florida • Wal-Mart Ending Its Layaway Program • FDIC Puts Retailers' Banking Plans on Hold • Wal-Mart/Sam's Club Settle with Connecticut on Pricing Violations • Congress May End Wal-Mart's Banking Dreams • Arizona Charges Wal-Mart, AutoZone with Consumer Fraud • Michigan Fines Wal-Mart $1.5 Million for Item Pricing Violations • Opposition Grows as FDIC Examines Wal-Mart Banking Bid • Wal-Mart's Banking Plans Draw Critics • Michigan Challenges Wal-Mart on Item Pricing • Wal-Mart May Stock "Emergency" Contraceptives • Black Friday Gives Wal-Mart a Black Eye • Connecticut Probes Wal-Mart Pricing • Wal-Mart Pushing Extended Warranties on Electronics • Bankers Oppose Wal-Mart's Entry into Banking • Wal-Mart Target Of Union-Led Boycott • Wal-Mart to Pay $14.5 Million for California Gun Law Violations • Wal-Mart Target Of Union-Led Boycott • Wal-Mart Tries to Buff Its Image

Several members of Congress have joined critics of retail giant Wal-Mart's plan for an industrial bank in Utah to process more than 1.6 million debit, credit and electronic check transactions.

In a letter to the Federal Deposit Insurance Corporation, the lawmakers said they have "grave concerns" about Wal-Mart's corporate citizenship record and believe a Wal-Mart owned bank would be a serious threat to small community banks.

Since July when it first filed the application, Wal-Mart has said it does not plan to operate retail banks at its thousands of locations around the country. But the critics aren't buying it for a moment.

"A Wal-Mart with thousands of branches would create competitive imbalances in the banking world and threaten small businesses, including community banks," the lawmakers' letter warns.

The members of Congress aren't alone in speaking out on the issue.

A spokesman for FDIC says the government agency has received nearly 2,000 letters commenting on the application. The agency's upcoming hearings on the request will likely be well attended. Groups ranging from the National Grocers' Association to the National Center for Missing and Exploited Children have asked for time to speak.

Critics say they are concerned that once Wal-Mart gets approval to operate one bank, there would be no way to stop it from moving in and dominating banking the way it has dominated retailing.

They maintain that Wal-Mart's proposed industrial bank would not be bound by limits currently imposed on commercial banks. They also say Wal-Mart could open branches outside of Utah -- in every Super-Center operating in all 50 states, for example.

Business analysts say financial services is a natural growth area for Wal-Mart, which generates billions of dollars in sales each week.

Though it recently introduced Wal-Mart and Sam's Club credit cards, the company says that's as far as it plans to go into retail financial services. It points out that more than 1,000 independent bank branches operate in Wal- Mart stores around the country and the company says it is actively seeking to lease space in its stores to other local banks.

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