FOR IMMEDIATE RELEASE
Wal-Mart Withholding ‘Essential Information’
ICBA and Coalition Object to Company’s FDIC Application
Washington, D.C. (August 11, 2005) - The Independent Community Bankers of America (ICBA), joining other members of the Sound Banking Coalition, has objected to Wal-Mart Stores Inc. omitting "essential elements" about the company's plans to own and operate an industrial loan company (ILC) in Utah from a publicly available FDIC application.
In an August 10 letter to FDIC officials, ICBA and the coalition of financial, retail and labor groups agreed that the missing information makes it impossible for the public to adequately assess whether the FDIC should grant the proposed ILC federal deposit insurance. In response, the coalition has asked federal officials to require Wal-Mart to disclose more information and to extend the public comment period on the company's application for FDIC insurance for 30 days.
"Essential elements-such as the risks associated with the proposed bank, potential conflicts of interest, interlocking management relationships, and the adequacy of capital-are shielded from public view," the letter states. "Until the information that Wal-Mart has attempted to conceal is made public, there is no opportunity for informed, meaningful public comment."
The coalition identified numerous instances where Wal-Mart withheld critical information in its FDIC application, such as the names and background of organizers and proposed executive officers of the ILC; the proposed compensation, including stock option plans, of directors and executive officers; how the institution would be capitalized; the purported need for the institution; and projections regarding the ILC's branch offices.
ILCs are hybrid FDIC-insured financial institutions, chartered by only a handful of states, that are exempt from the Bank Holding Company Act. ICBA and the coalition strongly believe that ILCs constitute a dangerous loophole in this longstanding federal law that prohibits commercial firms from owning banks and keeps banking and commerce separate. Mixing banking and commerce causes excessive concentration of economic power, jeopardizes the impartial allocation of credit, and extends the federal safety net where it was not intended.
In addition to ICBA, members of the Sound Banking Coalition include the National Association of Convenience Stores, the National Grocers Association and the United Food and Commercial Workers International Union.
For more information on Wal-Mart's effort to charter an ILC, visit ICBA's website at www.icba.org. The coalition's letter is posted in the News and Media Center section under "Letters to Regulators."