Wal-Mart pulls ILC application

Jacksonville Business Journal - 12:29 PM EDT Friday, March 16, 2007

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Wal-Mart has withdrawn its July 2005 application to open an industrial loan company (ILC), saying it was surrounded by "manufactured controversy" over its bid to acquire its own bank.

"This action follows January's FDIC decision to extend the moratorium on a number of pending ILC applications," said Jane Thompson, Wal-Mart Financial Services president. "Unlike dozens of prior ILC applications, Wal-Mart's has been surrounded by manufactured controversy since it was submitted nearly two years ago. At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs."


FDIC chairman Sheila C. Bair said in a prepared statement that Wal-Mart (NYSE: WMT) made a "wise choice."

"This decision will remove the controversy surrounding their intentions," Bair said. "They don't need an ILC to play an important role in expanding access to financial services, they can do so by partnering with banks and others. We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations."

A record number of commercial businesses are currently pursuing industrial loan charters, including the Blue Cross/Blue Shield Association, Berkshire Hathaway and The Home Depot Inc. (NYSE: HD). But the Independent Community Bankers of America (ICBA) has been lobbying Congress to close a loophole in the law that allows commercial firms to own ILCs. Banks and real estate agents also have come out against Home Depot owning its own bank.