[Previous entry: "Bush Touts Grants to Religious Charities"] [Next entry: "Norton to End 5-Year Tenure at Interior"]

03/11/2006:

"Lawmakers: Wal-Mart threatens US payment system"

WASHINGTON (Reuters) - A group of lawmakers on Friday said an industrial bank owned by Wal-Mart (WMT.N: Quote, Profile, Research), the world's largest retailer, could threaten the stability of the U.S. financial system and drive community banks out of business.

In a highly critical letter to the acting chairman of the Federal Deposit Insurance Corp., obtained by Reuters, a group of more than 30 Congress members asked the bank regulator to reject Wal-Mart's application to open a bank in Utah.

"Wal-Mart's plan, to have its bank process hundreds of billions in transactions for its own stores, could threaten the stability of the nation's payments system," the lawmakers wrote.

"Given Wal-Mart's massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system."

The congressmen said the losses to the FDIC, which insures deposits at banks and thrift institutions, could be staggering if Wal-Mart begins to have financial troubles that bleed into its bank's business.
today.reuters.com