Lease terms suggest Wal-Mart may still have banking plans
Wal-Mart Stores Inc. may be eyeing a larger role in banking than it has disclosed, according to lease details made public Thursday by a congressman who accused the world’s largest retailer of hiding plans to become a retail bank.
Wal-Mart is seeking federal approval to open a limited-purpose bank for processing credit-card transactions and other payments. Its executives have pledged in testimony to regulators that they have no plans to open bank branches or start consumer lending.
Wal-Mart’s bank effort caused such a furor last year that the Federal Deposit Insurance Corp. held a public hearing, the first by the agency on a license application. Critics say even a limited banking role for Wal-Mart would vest it with too much economic power.
Supporters, however, say that the retailer could help reduce fees and costs for consumers and that the industry is in need of more competition.
Rep. Paul E. Gillmor (R-Ohio), a leader of efforts to draw a strict line between commerce and banking, released a Wal-Mart e-mail detailing lease terms with banks that rent space for branches inside hundreds of Wal-Mart stores.
The terms reserve Wal-Mart’s right to offer an array of financial services in its stores.
Under the terms described in the e-mail, Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that Wal-Mart might develop.
Wal-Mart said the terms resembled those used in the company’s leases with outside banks for at least five years.
But the language in the e-mail was not in other leases Gillmor has seen, said Bradley Mascho, a spokesman for the congressman.
A Wal-Mart lease with a community bank, obtained last year by the Associated Press and confirmed as authentic by Wal-Mart, does not contain the language in question.
The lease refers to Wal-Mart’s offering credit cards and “other financial or investment products and services” but does not specify some consumer services laid out in the e-mail, such as mortgages and loans.
The e-mail from Larry Ellis, Wal-Mart’s leasing manager for in-store banks, said new services could be offered “in the checkout lanes, at the Customer Service Desk, through automated delivery channels, kiosks, or devices, or in any other location or format within the store.”
Gillmor said the lease terms showed Wal-Mart was secretly planning to move into retail banking despite assurances to the contrary in testimony last year to the FDIC.
“This latest information,” he said, “is the smoking gun of Wal-Mart’s dishonesty.”