Wal-Mart, who’s position as the worlds largest retailer and employer didn’t seem to be enough, was pushing hard last year to open their own bank. In March Wal-Mart withdrew its application but the fight is not over. On Thursday U.S. senators introduced bipartisan legislation that would block retailers such as Wal-Mart or Home Depot Inc. from operating a bank.
WASHINGTON (Reuters) – U.S. senators introduced on Thursday bipartisan legislation that would block retailers such as Home Depot Inc. from operating a bank.
The bill, which is co-sponsored by Democrats Sherrod Brown of Ohio and Tim Johnson of South Dakota, and Republican Wayne Allard of Colorado, mirrors a version that is expected to win approval by the full House of Representatives.
The House is expected to consider it this month.
The lawmakers, who are members of the Senate Banking Committee, said panel Chairman Christopher Dodd has not yet expressed support for the bill.
However, such a ban is opposed by another member of the committee, Utah Republican Robert Bennett, whose state is home to many of the commercially owned banks known as industrial loan companies (ILC).
“He does not support this bill,” a Bennett spokeswoman said.
Like the House version, the Senate bill would ban applications to the Federal Deposit Insurance Corporation to start a new ILC or acquire existing ones.
It would also halt commercially owned ILCs established after October 1, 2003, from expanding into other states or being sold to another retailer. Commercial companies that created ILCs before that date will be allowed to keep them, but cannot sell them to another retailer.
The bill would also expand supervision authority for the FDIC and reduce duel supervision for some ILC holding companies, such as big investment banks, that are already regulated by the Securities and Exchange Commission.
The senators said the bill will not include an exemption to allow auto companies to establish an ILC to help sell their cars, trucks and motorcycles.
“I hope we don’t get into exemptions,” Allard told reporters at a news conference.
ILCs are state-chartered banks with access to federal deposit insurance. They can offer deposit accounts, mortgages, credit cards, loans and other services.
U.S. banks, especially smaller ones, have voiced concern about a surge in ILCs over the last two decades, saying they could be forced out of business if big retailers enter the industry. Target Corp. already owns an ILC.
In March, Wal-Mart withdrew its ILC application, but Home Depot is still seeking permission to buy an ILC.
The ILC industry has combined assets of more than $170 billion. The biggest ILC bank is Merrill Lynch Bank USA, which had about $67 billion in assets last year.
We’ll keep everyone up to date on the latest news regarding this bill.