FOR IMMEDIATE RELEASE
‘Big Box’ Retailers Don’t Belong in Banking ICBA Tells Lawmakers
Washington, D.C. (May 25, 2006)— Independent Community Bankers of America (ICBA) warned Democratic lawmakers during a House Small Business Committee roundtable discussion about the dangers of letting giant retailers, like Wal-Mart and Home Depot, use a rare loophole in the banking laws that permits commercial companies to own a bank.
"California had the foresight to close this dangerous loophole that allows commercial enterprises access to the banking industry through a highly specialized bank called an industrial loan company," said Stephen G. Andrews, president and CEO of the Bank of Alameda, Calif., speaking on behalf of ICBA. "ICBA urges Congress to follow suit, and close the ILC loophole that allows big box retailers to get into banking before it's too late."
ICBA and 20 small business groups welcomed the opportunity to examine the impact of big box stores and address members from the House Small Business, Ways and Means and Financial Services Committees, the Congressional Black Caucus and the Congressional Hispanic Caucus. ICBA has taken a lead role in working to maintain our nation's long-held policy separating banking and commerce and preserve banking options for small businesses and consumers.
"Big box stores often don't share our commitment to our communities. This has been demonstrated in community after community where big box stores shut down when the bottom line got too small," Andrews added. "Community banks stay and work with the community in good times and in bad."
ICBA is greatly concerned about the impact on the granting of credit and questions whether a big-box-owned bank would lend to small businesses that compete with the big box.
Karen Thomas, ICBA executive vice president and director of government relations, told lawmakers that big box retailers alter the marketplace in a way that creates great challenges for local firms. "Through competitive advantages, big box retailers are able to price their goods and services well below local merchants, creating obstacles for independent entrepreneurs to remain profitable, which in turn leaves consumers with fewer choices and communities with less vibrant Main Streets."
She added that another risk of big-box-owned banks is that they siphon deposits away from local communities and invest that money elsewhere. "With reduced investment, local communities lose small businesses and since small business owners are typically the community civic leaders, the communities lose their economic engine - no new jobs are created, people move away and in the end, economic opportunity is stifled," Thomas said.