Bank of Wal-Mart

The world's largest retailer wants to open a bank, and its critics are showering federal regulators with pleas to say no.

Wal-Mart Stores' application to the Federal Deposit Insurance Corp. to charter a bank has drawn 1,550 mostly negative comments, the most ever. With bank-charter applications, a half-dozen comments is considered a lot, the FDIC says.

Wal-Mart wants to start an industrial loan corporation (ILC), a type of bank that regulators let commercial businesses operate for specific purposes, such as processing payments. Most negative comments stressed the dangers of an unregulated commercial company owning a federally insured bank.

Among the concerns: "Is the parent company sufficiently regulated? Will credit decisions be objective? Will economic power become too concentrated?" says Edward Yingling, CEO of the American Bankers Association, a trade group of independent banks that opposes Wal-Mart's application...

Opponents, ranging from banks to unions, fear that Wal-Mart might someday move to put its own banks in its stores, in turn devastating community banks...

Wal-Mart says it has no plans to use the ILC to offer banking services to the public, though it does plan to offer certificates of deposit to non-profits. It says it wants to form an ILC only to save "millions" of dollars that it pays financial institutions for processing its debit, credit and electronic check transactions...

This is Wal-Mart's fourth attempt to get into banking. In 1999, it tried to buy an Oklahoma thrift, but a change in federal law banned thrift ownership by commercial entities. In 2001, it tried to partner with Toronto-Dominion Bank to open branches in stores but failed to get the OK of the Office of Thrift Supervision. In 2002, it tried to buy an ILC in California, but a state law was passed prohibiting non-financial institutions from owning ILCs.