The failure of Wal-Mart would pose an enormous systemic risk to the FDIC insurance fund," testified Larry Maschhoff, president of the Bank of Illinois in Normal. "What if Enron ... had owned banks?
Well, Larry, Wal-Mart is not opening banks.
Marshall Manson of Edelman Public Relations pointed out to me in an e-mail some clarifications.
The retailing giant is seeking FDIC approval to operate as an industrial bank. Which means instead of having to utilize a third-party financial institution to process a customer's check, debit or charge card payment, Wal-Mart can perform these transaction themselves. Just as Target, GE, Toyota, and General Motors do.
The banks currently performing these transactions for Wal-Mart currently charge the retailer millions of dollars each year for this work. Wal-Mart is simply asking for the same privilege its chief competitor Target enjoys.
As Wal-Mart goes through the FDIC approval process to operate as an industrial bank, the scaremongers are turning up anti Wal-Mart volume "up to 11." Over a thousand local banks operate within Wal-Mart stores. Where I shop, at the Niles, Illinois Wal-Mart, Chicago's Devon Bank occupies prime interior real estate between the customer service desk and the store's restaurant.
Wal-Mart has no plans to terminate any of these banking relationships.
The volume may be up to 11, but it's still hot air.
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