Wal-Mart bank ignites regulatory row [Utah]

Financial Times ^ | February 21 2006 | Jonathan Birchall

[ncountylee]

Wal-Mart, the world’s largest retailer, has encountered predictably stiff opposition to its efforts to open a small state-chartered bank in Utah.

Community bankers, independent grocers and labour unions have been fighting the move, arguing it could lead to the retailer providing a broad range of banking services that would further strengthen its dominance.

But Wal-Mart’s application has also reignited a much wider regulatory debate in Washington – over the status of state-chartered industrial loan companies (ILCs), described by Alan Greenspan, former head of the Federal Reserve, as a “loophole” in US bank regulation.

Utah currently licenses more than 35 such industrial banks, run by investment banks, carmakers and finance companies, as well as by Target, Wal-Mart’s discount store rival.

Target uses its Utah bank to issue its business credit card. Volvo, BMW and General Motors use the banks to operate car financing. Volkswagen’s bank also operates online and offers interest bearing certificates of deposit and mortgage lending.

Wal-Mart says it wants to use its Utah bank to cut credit and debit card processing costs and is not seeking permission for an interstate branch network

[ncountylee]

Have zero problem with this.

[Vladiator]

Who ever would have thought that socialism would come from the corporations?

[bigsigh]

I have a big problem with it.

[norraad]

Modern corpos like saving money more than sex.

[KarlInOhio]

I went to Wal-Mart bank and was only able to get this cheap Chinese money.

[xroadie]

Modern corpos like saving money more than sex.

Since earning profits for their stock holders, not having sex, is the purpose of a corporation, I think that's understandable.

[norraad]

Yes, it's very true, my angle is some corpos go at it like hitler in a bunker.

It can reck havoc on the folks like me who are trying to run the machinery of the corp. w/o enough oil to keep things well lubed, because some necktie nazi wanted to impress his inferior superior by saving on necessary expenses.

[pennboricua]

Could you imagine the anger in the banking community when Wal Mart starts providing a host of banking and savings options at better rates than are currently being offered?
I think we would benefit from a Wal Mart bank.

[M-cubed]

but they sure hate to pay it out in interest to the actual owners..the stockholders

[rellimpank]

In the nineteenth century, Congress had been reluctant to regulate business. It often granted businesses absurd subsidies (for example, to encourage the railroads to expand across the U.S.), and regulated matters involving navigation, but for the most part, the governing theory was laissez-faire: leave the marketplace alone. In the twentieth century, Congress became increasingly interested in regulating business on a national scale--and there are several theories that attempt to explain why. One of the most intriguing is that presented in Gabriel Kolko's Triumph of Conservativism. Kolko, a socialist historian, unintentionally produced a spectacular defense of laissez-faire capitalism, demonstrating that most of the reason why Congress went into a frenzy of economic regulation in the Progressive Era (1900-16) was because the robber barons of the time were unable to figure out how to monopolize major industries--and so they needed the federal government's assistance.4 --

The above quote from Clayton Cramer's column in Shotgun News indicates it's not a new problem, either--(bold is mine)--

[USS Alaska]

Could you imagine the anger in the banking community when Wal Mart starts providing a host of banking and savings options at better rates than are currently being offered?

Wal-Mart's initial thrust will be a credit card and finance operation, just like GMAC, GE Credit and a host of others. That's a long way from general banking operations.

[randog]

Could you imagine the anger in the banking community when Wal Mart starts providing a host of banking and savings options at better rates than are currently being offered?

The comic value of watching banking execs standing next to neohippies, all whining about Wal*Mart squeezing the little guy, would be worth it alone.

[Antonello]

I have a big problem with it.

What is the problem you have with it?

[bigsigh]

The state is blocking commerce.

[rellimpank]

--I'd like to see them sell used cars--

[TChris]

Who ever would have thought that socialism would come from the corporations?

The competition will use whatever means necessary to deny Wal-Mart any ground. They'd probably be willing to shoot themselves in the head if it meant Wal-Mart couldn't have it.

[Antonello]

The state is blocking commerce.

My apologies. I thought you were expressing that you had a problem with Wal*Mart's banking desires. Nevermind.

[Zon]

The above quote from Clayton Cramer's column in Shotgun News indicates it's not a new problem, either--(bold is mine)--

The excerpt posted below from this link, The Destruction of a Wealth and Jobs Creator by Parasitical-Elites, is an excellent read.

The Destruction of a Wealth and Jobs
Creator by Parasitical-Elites

James J. Hill was a 19th-century railroad entrepreneur. Hill was an integrated thinker who broke out of a restricted, one-country mode and began pushing into a worldwide mode. Unfortunately, just as Hill achieved great success in the American railroad industry and began spearheading an international expansion, his worldwide growth was snuffed out by glory-seeking politicians. The story of James J. Hill is documented in the book The Myth of the Robber Barons by Burton W. Folsom, Jr.

 

Political Entrepreneurs Versus Market Entrepreneurs

In that book, Folsom identifies how throughout history there have been two distinct types of entrepreneurs: political entrepreneurs and market entrepreneurs. Political entrepreneurs seek profits by working with the government to get subsidies, grants, and special privileges. In other words, political entrepreneurs seek success through political pull. In contrast, market entrepreneurs seek success by producing increasingly improved products and services at increasingly lower costs.

The Destruction of a Wealth and Jobs Creator by Parasitical-Elites

[bigsigh]

My reading is that the story is about the state blocking WalMart while allow competitors to do business. The comment I was responding to said they had no problem with that.