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Both the New York Times and the Wall Street Journal report that Wal-Mart has been renegotiating the terms of its leases with a number of banks that have branches in its stores, reserving for itself the right to offer a broad range of financial services, including loans, lines of credit and mortgages. Indeed, the leases say explicitly that Wal-Mart can offer these products and services “in the checkout lanes, at the customer-service desk, through automated-delivery channels, kiosks" – virtually anyplace in the store.

The revelation could put a crimp in Wal-Mart’s goal of getting an industrial bank charter from the Federal Deposit Insurance Corporation (FDIC). The FDIC has put a hold on Wal-Mart’s application, and a general moratorium on the consideration of all such applications from non-financial services companies. Wal-Mart’s application has been opposed by the banking industry, which has claimed that the retailer had intentions of getting into precisely the businesses mentioned in the renegotiated leases; Wal-Mart, on the other hand, has maintained that it only wanted to own a bank so it could use it to reduce fees on credit and debit card transactions.

Wal-Mart spokesman Kevin Gardner tells the Journal that the lease language doesn’t "signal anything new." Gardner said, "We've been offering services like check cashing, money transfers, branded credit cards and bill payments for some time. Our strategy is to continue to grow our existing financial services to continue to save our customers money so they can live better."
KC's View:
Our position all along has been that consumers would be better off if the financial services industry had a competitor like Wal-Mart…and it doesn’t surprise us that the Bentonville Behemoth has those plans in a back pocket.

However, it isn’t going to help Wal-Mart’s case that it appears the company has been less than forthright about its goals. It ought to come right out and say that banks are ripping off consumers, and that it wants to save people money. It ought to lay out how consumers are being taken advantage of by credit card companies. And it ought to explain in plain English how it wants to change the way people get loans, obtain mortgages, etc…

We’re not suggesting that there isn’t a potential downside to a company like Wal-Mart having that much financial power. We are saying, however, that this is a simple case to make to consumers…who then could be rallied to put pressure on the Congress and the FDIC to allow Wal-Mart to have the charter it wants. Sooner, rather than later.