How Broad Coalition Stymied Wal-Mart's Bid to Own a Bank

by Mike Bevel, CollectionIndustry.com

The Wall Street Journal is looking to break down what went wrong in the Wal-Mart bank application fiasco.

Some highlights:

• The industrial bank charter Wal-Mart is applying for? Is the same kind already given to other companies like Volkswagen, Pitney Bowes, and Target. The difference? Looks to be public perception. Wal-Mart has a reputation, if you will, for aggressive tactics that the other players listed do not.

  
  

• Wal-Mart is facing slowing growth in the U.S., and has ?stumbled? in several overseas forays. The industrial bank charter means a lot to the retail Goliath.

  
  

• Wal-Mart?s bank bid has created an unlikely ragtag coalition worthy of Lee Marvin?s Maj. John Reisman. According to the Journal, ?Some in the coalition are mainly interested in dealing a blow to Wal-Mart. Others are worried about the trend of allowing commercial companies into banking, which they fear could undermine the soundness of the financial system. That argument has been around for years, but it generated little political heat until Wal-Mart came along — illustrating the power of the company’s name to transform stalemated policy debates.?

  
  

• The Journal also shared this tidbit: Despite overhauling its lobbying efforts in Washington, Wal-Mart continues to make rookie mistakes. It retained a headhunter to look for a senior financial executive, fueling fears that its banking ambitions were broader than it said. Wal-Mart says it was seeking someone for an employee-mortgage program. It initially asked to be exempt from the Community Reinvestment Act, which forces banks to reinvest in communities where it does business. That angered some Democrats. More recently, Wal-Mart’s Mexican unit applied for a license to conduct retail banking there, again raising doubts among critics, although Wal-Mart notes that the Mexican bank couldn’t open branches in the U.S.