Community Bankers Association of Illinois

WAL-MART APPLIES FOR INDUSTRIAL LOAN COMPANY CHARTER

As anticipated, Wal-Mart last week (July 18) applied for an Industrial Loan Company (ILC) charter in Utah which is likely to be approved. Although Wal-Mart representatives claim that the only intended use is for "backroom" processing, CBAI believes the underlying goal is to enter retail banking on a nationwide basis.

Legislation pending in the U.S. Senate would allow ILCs to offer interest on business checking, and other legislation is expected that would permit unlimited national interstate branching for ILCs. When combined, the long-standing separation between banking and commerce would be eliminated.

In response to the filing, ICBA CEO Camden Fine stated on July 20, 2005:

    "ICBA has led the fight to close loopholes in the law to keep Wal-Mart and other commercial conglomerates out of the banking industry. Mixing banking and commerce is a dangerous combination that would produce an excessive concentration of economic power, jeopardize the impartial allocation of credit, and extend the Federal safety net where it was not intended. We will continue the fight in Congress to close remaining loopholes, such as the ILC loophole, to protect the integrity of our nation's financial system.

    "We are aware of Wal-Mart's current "no-branching" pledge, but are concerned that over time their business plans will change and they will seek to engage in retail banking operations. We will be watching the situation in Utah carefully."

CBAI shares ICBA's concerns and will fully support efforts to avert commercial ownership of banking.

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