Wal-Mart Drops Controversial Element of its Bank Bid

In a bid seemingly tailored to garner Democrat support while placating some Republicans, Wal-Mart has dropped its application for a proposed exemption from the Community Reinvestment Act in its quest to open an industrial bank. The Act is designed to ensure that the credit needs of low- and moderate-income neighborhoods are met.

Wal-Mart’s proposed exemption never really proved entirely favorable with Capitol Hill law makers. On Thursday, 45 members of the U.S. House of Representatives ? both Democrats and Republicans ? wrote to the Federal Deposit Insurance Corp. expressing strong reservations about the exemption. Some worried that there might be unforeseen consequences to the U.S. payment systems; others expressed concern that Wal-Mart banks would drive small community banks out of business.

Wal-Mart has not commented on its motivation to drop its application. Industry insiders, though, see the move as potentially beneficial for the superstore’s industrial bank application in Utah ? a bid that itself is not without some controversy. Ostensibly offering Wal-Mart a more economical way of processing credit card payments, critics see the Utah bank as a launching point for in-store Wal-Mart banks. Wal-Mart has denied that it has any intention of establishing bank branches.

For this complete story, please visit Wal-Mart pulls part of bank bid, could temper foes.