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Old March 20th, 2006, 11:59 AM   #1
Lothos
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Default explain this walmart thing to me

Wal-Mart bank draws more congressional fire
Reuters News 03/20/06
by Kristin Roberts
(C) Reuters Limited 2006.




--------------------------------------------------------------------------------

WASHINGTON (Reuters) - A bipartisan group of U.S. congressmen will this week ask regulators to deny Wal-Mart's bank application, the latest push from some on Capitol Hill to oppose the bid as public hearings near.

The House members, in a letter to the U.S. Federal Deposit Insurance Corp. obtained by Reuters say that due to Wal-Mart's (WMT.N: Quote, Profile, Research) scope and international dealings, financial problems within the company might damage the bank and disrupt the U.S. payments system.

The letter strikes similar chords as previous congressional correspondence on the retail giant's application, raising concerns about the lack of full bank regulatory oversight and the risk of loss to the federal deposit insurance fund.

Without proper regulatory oversight, an industrial bank owner may put the solvency of both the bank and parent at risk, writes the group of more than 20 congressmen, including Ohio Republican Reps. Paul Gillmor and Steven LaTourette and Democratic Rep. Luis Gutierrez of Illinois.

Gillmor, LaTourette and Gutierrez were not immediately available to comment.

Wal-Mart, the world's largest retailer, has applied to open an industrial bank, known as an industrial loan company, to handle its electronic payment processing.

According to the application filings, the Wal-Mart Bank would not offer processing services to other retailers, offer services to the public or establish bank branches.

Still, it has generated intense opposition from some in Congress and banks that fear competing with the retail powerhouse, as well as groups that regularly criticize Wal-Mart, such as labor and environmental groups.

Recent criticism has focused not so much on Wal-Mart as on industrial loan companies overall.

Industrial banks are state-chartered and state-regulated, and fall under the supervision of the Federal Deposit Insurance Corp. (FDIC). Commercial companies may own them because federal laws that bar non-financial companies from engaging in banking activities do not classify industrial banks as banks.

But after the Federal Reserve raised concerns that commercial owners of industrial banks escape a level of federal bank supervision, those opposing Wal-Mart's bid began questioning whether that lack of full oversight could allow troubles within the company to bleed into the bank's business and disrupt the payments system.

Other opposition has focused on the historic separation of banking and commerce in the United States. Some say Wal-Mart could drive community banks out of business.

Wal-Mart, however, is not the only commercial firm or retailer to seek to set up an industrial loan company. Rival Target Corp. (TGT.N: Quote, Profile, Research) succeeded in its industrial bank application, and General Electric (GE.N: Quote, Profile, Research) and General Motors (GM.N: Quote, Profile, Research) also have industrial banks.

Wal-Mart has looked ahead to public hearings set for April, saying it wants to explain the functions its proposed bank would perform.

The FDIC on Monday is set to release a list of people scheduled to testify at the hearings -- the agency's first formal public hearings ever on a bank application.

While lobbying has intensified against the bid, some analysts say that if the FDIC follows statute, there is little reason Wal-Mart's application should be denied if Target's succeeded.

So far, dozens of lawmakers have signed letters to the FDIC asking the agency either to reject the application or exercise caution in its review. Those members have included Democratic Sen. Hillary Clinton of New York, a former Wal-Mart board member, and Rep. Barney Frank of Massachusetts, the top Democrat on the House Financial Services Committee.



.




How exactly is Walmart's bank going to hurt the US economy? Some big boys not wanting to play well with others?
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Old March 20th, 2006, 12:14 PM   #2
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Originally Posted by Lothos
Wal-Mart bank draws more congressional fire
Reuters News 03/20/06
by Kristin Roberts
(C) Reuters Limited 2006.




--------------------------------------------------------------------------------

WASHINGTON (Reuters) - A bipartisan group of U.S. congressmen will this week ask regulators to deny Wal-Mart's bank application, the latest push from some on Capitol Hill to oppose the bid as public hearings near.

The House members, in a letter to the U.S. Federal Deposit Insurance Corp. obtained by Reuters say that due to Wal-Mart's (WMT.N: Quote, Profile, Research) scope and international dealings, financial problems within the company might damage the bank and disrupt the U.S. payments system.
I dont see the risk they state as any more of a risk than an independent bank. Wallmart is very stable and strong and growing almost at a staggering rate. What financial problems would wall mart have than any other bank? At any rate i see such problems as less likely with wall mart and its a non issue.



wall mart is very smart and very lean. They no doubt can run a bank more effeciently than the banks that currently service them. By starting there own bank to handle charge cards etc they can save themselves a few percent on sales and further lower prices below what other retailers can offer.

Opposition. 1, lobbyists from the banks that dont want to lose there easy money handling wall mart.

2. lobbyist from other large mulitnational retailers, and any supermarket chain like A&P, etc dont want to see wall mart gain another effeciency that they can't compete with.

Thats my take.
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Old March 20th, 2006, 02:08 PM   #3
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the buffer zone of banking instatutions helps sperate banking and retail,

GM's GMAC is their company they like to finance cars through, the only way GM was able to finance for 0% was that they owned the bank that financed the cars. Welll if GM decided to start taking money from GMAC to keep its daily operations alfoat it would be a conflict of interest of GMAC and would possibly lead to legal troubles for GMAC or financial troubles that they are not in control over but yet have no say.

so if WalMart opened its own bank, and walmart went belly up, their own bank would not start to repo and or sell off walmart locations if they would as if they were a normal independent bank, then the WalMart bank would have no money to pay their suppliers, and if no bank is going to take action on those debts they don't get their money, and since it's not classified as a bank in federal terms they are not regulated.

In my view i don't want walmart having it's own bank, it would be too much power for them.
Atleast GMAC only finances most the cars GM sells and a few homes for their workers, not too much of a conflict of interest in my view.
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Old March 20th, 2006, 02:35 PM   #4
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t... and a few homes for their workers, not too much of a conflict of interest in my view.
!

GMAC's real estate holdings and mortgages are far and away more than "just a few". and definately more than just "their workers".

one of the reasons I went GMAC, is that while they reserve the right to resell the mortgage servicing agreement, they almost never do (in my experience, and asking about the portfolio at the local branch offices)

nothing like refinancing a house, and then 4 weeks later having it reassigned to the commercial mortgage market and finding someone else servicing the mortgage/escrow payments - usually it goes smoothely, but that assignment, and reassignment also goes badly more often than the market would have you beleive.

and by badly, eventually it all gets worked out, but a lot of people get fired up when they get threatening letters from the banks immediately after signing on a large mortgage simply cause the paperwork didn't make it from one bank to another efficiently...
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Old March 20th, 2006, 03:00 PM   #5
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I would guess that walmart is offering lower intrest rates etc through credit cards etc. that it is upsetting the larger banks.

Its the American way....... supply and demand...........
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Old March 20th, 2006, 03:13 PM   #6
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I love walmart

especially the one up by home

the greeters are so friendly and old
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Old March 20th, 2006, 03:14 PM   #7
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Originally Posted by RyeBread
!

GMAC's real estate holdings and mortgages are far and away more than "just a few". and definately more than just "their workers".

one of the reasons I went GMAC, is that while they reserve the right to resell the mortgage servicing agreement, they almost never do (in my experience, and asking about the portfolio at the local branch offices)

nothing like refinancing a house, and then 4 weeks later having it reassigned to the commercial mortgage market and finding someone else servicing the mortgage/escrow payments - usually it goes smoothely, but that assignment, and reassignment also goes badly more often than the market would have you beleive.

and by badly, eventually it all gets worked out, but a lot of people get fired up when they get threatening letters from the banks immediately after signing on a large mortgage simply cause the paperwork didn't make it from one bank to another efficiently...
ah i see i see, but still my analogy for Walmart stands, they are refusing to do buisness with anyone but them selves, versus GMAC that wants everyones buisness.

thanks for the info though on their reassaignment practices, i didn't know GMAC was one of the few that don't resell your mortgage. Happens with my student loans all the time Bank--> <--me
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Old March 20th, 2006, 04:03 PM   #8
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its gotta be the fact its wall mart. The article said Target has its own bank. The issues are no different with Wallmart except wall mart is more popular to beat up in the media, and blame for the down fall of small town business districts and mom and pop shops. The issue either is "hey i beat up on wall mart i am pro american jobs/anti outsourcing" or other retailers not wanting to compete with wall mart as they exist today, much less with any other advantage that they can further trim costs from and gain another effeciency. Its every other mass retailers worst nightmare. That wallmart has a further effeciency they dont and cant easily manage, or have the same net benefit wall mart will likely see cause they are so great at trimming costs and running a tight ship.

I think the legislators know they cant deny wall mart, they are jsut posturing for face time on TV and to seem tough on giant corps like wall mart.

Last edited by jamiesann; March 20th, 2006 at 04:22 PM.
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Old March 20th, 2006, 09:36 PM   #9
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WalMart = target of liberal rage, and hence media scorn.

In an effort to garner the allegiance of organized labor, politicians are aligning against WalMart as they seek to paint WalMart as the very personification of everything that is wrong with capitalism.

Yes, they buy cheap stuff from China and sell it cheaply.

No, they don't think that an unskilled retail clerk job should pay $60K a year.

Yes, they are huge and smart and use it to their advantage.

They play to win, and are pretty good at it.

If you don't like it, don't shop there.
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Old March 21st, 2006, 10:37 AM   #10
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Originally Posted by jamiesann
wall mart is very smart and very lean. They no doubt can run a bank more effeciently than the banks that currently service them. By starting there own bank to handle charge cards etc they can save themselves a few percent on sales and further lower prices below what other retailers can offer
Thats my take.
My mom has worked for walmat for a good 10 years. They are not smart they do however fire employies after about 10 years for no reason to keep labor cost down. Wal mart in my opinion is a evil corperation and thats probly the reason for blocking the bank.
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Old March 21st, 2006, 02:01 PM   #11
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My mom has worked for walmat for a good 10 years. They are not smart they do however fire employies after about 10 years for no reason to keep labor cost down. Wal mart in my opinion is a evil corperation and thats probly the reason for blocking the bank.
well i meant compared to the retail environment. I am not comparing them to google or southwest, or jet blue, or apple as some model that you should follow.
I worked for J.C. penney in highschool, and in college worked at sears and homedepot. I never worked at Wallmart but from what i have read sam walton was responsible for computerized inventory, retail infa red scanners lots of innovation in retail, best inventory control in retail bar none. as of 2002 sears had a antiqutated inventory system that was a total joke. Nothing showed up on time, and if you looked up somehting it would say we had 6 model X ladders in back or X treadmills, and you go in the stock room and there is none. TOTAL joke. And they were doing 43 BILLION in revenue!! I think they were a top 5 retailer.

If Wallmart can replace a ten year veteran for 40 % less with a guy off the street, and the guy off the street can do virtually as good a job in a few days have the job down, and be 95 % as good as the vetern in a month, why not cut them loose? Keeping labor costs down is a good reason thats how they keep all the costs down. Doesnt build loyalty but then most peole only care about the botton price they dont even care if its good quality. Just the out the door price. Dont blame wall mart they are doing what they need to get people what they want. Go into the parking lots and yell at all the dumb cheap skates. They are the ones to blame. Wallmart is just giving them what they want.

Last edited by jamiesann; March 21st, 2006 at 02:48 PM.
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