Wal-Bank

Regulators hear Wal-Mart critics By Kristin Roberts, Washington(Reuters)
UPDATE 3-Wal-Mart defends bank bid, draws fire from critics By Kristin Roberts, Washington(Reuters)
Wal-Mart Bank Opposed by Bankers, Consumer Groups (Update5) By Lauren Coleman-Lochner, New York

Wal-Mart has applied to the Federal Deposit Insurance Corporation (FDIC) for insurance for a proposed bank in Utah, one of the few states that allows commercial firms to operate banks.

Meanwhile, Utah is reviewing Wal-Mart's application for a bank charter. A coalition of labor unions, community groups, small bankers and other Wal-Mart critics has been urging the FDIC to hold hearings around the country before deciding the merits of Wal-Mart's application, and to compel Wal-Mart to disclose more information on how its new enterprise would affect local economies.

The small bankers also worry that the Wal-Mart bank, though based in Utah, could begin operating chapters in other states, threatening local lending institutions nationwide. And they worry about mixing commerce and banking.

The hearings in Arlington, Virginia, are the first the agency has ever held on an application. More than two dozen consumer groups and bankers are testifying that the company's reputation for wiping out competitors and its poor track record as a corporate citizen should convince the FDIC to reject Wal-Mart. The company's past attempts to operate banks in California, Oklahoma and Toronto have all been rejected by government regulators.

Labor and community groups have pointed out that given Wal-Mart's history of breaking labor and sex discrimination laws, there is little reason to think that Wal-Mart would obey banking laws.

Community advocates like ACORN are particularly troubled that Wal-Mart is trying to exempt its Utah bank from the Community Reinvestment Act, which requires financial institutions to make credit available in the low- and moderate-income communities in which they operate, and has sometimes been a genuine impetus to economic development in poor neighborhoods.