(Washington, DC) – The United Food and Commercial Workers International Union (UFCW) looks forward to participating next month in the Federal Deposit Insurance Corporation’s (FDIC) public hearings on Wal-Mart’s application for an industrial loan company (ILC) charter in Utah.
“The unprecedented number of comments against the Wal-Mart application show broad-based opposition to approving the application.” said Michael J. Wilson, UFCW International Vice President and Director of Legislative and Political Action. “We fully expect that the public hearings will offer further evidence on why the FDIC has ample authority to reject Wal-Mart’s application.”
ILCs are regulated differently than banks because they were originally small entities permitted by a loophole in the Bank Holding Act. If Wal-Mart, the world’s largest retailer with a history of unethical business practices, is granted access into banking via an ILC charter, there will be far-reaching consequences beyond the original intent of the act. If Wal-Mart charters in Utah, a “Wal-Mart bank” could branch out into more than 20 states because of state reciprocal branching laws. While Wal-Mart denies it plans to enter retail banking, its previous applications contradict their current publicly stated plans. Approving the Wal-Mart application risks not only undermining the separation between commerce and banking, but threatens an expansion of “Wal-Mart banks” in multiple states, and in multiple aspects of the banking industry.
With an ILC charter, Wal-Mart’s sheer size and greed would threaten our nation’s banking system. If Wal-Mart enters retail banking, competitors will have to follow suit in order to remain competitive. This would endanger community banks that are essential to local economies and cause concern among small local businesses across the nation.
“UFCW will continue working with its partners in the Sound Banking Coalition, in the labor movement, and with consumer and community groups to make sure the FDIC is aware of the serious concerns about Wal-Mart’s application into banking,” said Wilson.
The UFCW expects these and other issues to be thoroughly debated by regulators and lawmakers before any decision is made on granting Wal-Mart access into banking.