Wal-Mart bank delayed
FDIC deals a setback to retailer's plans for Utah
But Wal-Mart Bank officials said they will "stay the course" despite the setback.
The Federal Deposit Insurance Corp. wants Congress to sort out some concerns about commercial companies creating industrial loan corporations, also known as ILCs, so it will extend a moratorium on approvals for at least the next year. Among pending applications are those from retailing giant Wal-Mart and Home Depot, the world's largest home improvement company.
"Public policy issues about the ownership of industrial banks by commercial companies clearly exist today, and the extension will allow Congress a reasonable interval to determine whether and on what terms commercial companies can own industrial banks," said FDIC Chairwoman Sheila Bair.
The FDIC received 12,600 public comments on the commercial ownership of ILCs, Bair said, with 13,000 separate comments coming in on the Wal-Mart application alone.
"We're incredibly disappointed with the decision by the FDIC," said Alan Whitchurch, president and chief executive officer designee for Wal-Mart Bank in Organization. "We've been very frustrated with the process and felt that the FDIC has ample authority and enough information to approve or reject the pending commercial charter applications for insurance, including Wal-Mart's."
"The moratorium will allow the FDIC to continue evaluating safety and soundness concerns that have been raised regarding industrial loan banks owned by commercial companies, as well as work with Congress to provide input for any legislation that may affect the FDIC's oversight over industrial banks," Bair said.
A six-month moratorium on ILCs was set to expire Wednesday, but the regulators extended it just on the commercial company applications until Jan. 31, 2008. Applications from financial institutions still would go ahead, but the FDIC voted to get the federal process going on new rules that they would use to guide the review process.
Wal-Mart submitted its application to the FDIC and the Utah Department of Financial Institutions in July 2005. As of Wednesday, the Utah department had not accepted the application as complete.
However, Edward Leary, the department's commissioner, said the moratorium extension was "unnecessary, anti-competitive, not in the best interest of consumers and stifles innovation in the marketplace."
You can be the first to comment on this story.