CALIFORNIA LEGISLATURE STYMIES WAL-MART'S BID TO BUY A BANK
The California legislature worked through much of the Labor Day weekend. Late on Friday night, following the gifted leadership of Lou Papan, chairman of the California Assembly's Committee on Banking and Finance, the Assembly passed legislation effectively blocking Wal-Mart's application to buy a small industrial bank in California. If the application had been allowed, that small bank could have branched widely throughout the United States.
Washington heavyweights Senator Paul Sarbanes, chairman of the Senate Banking Committee, and Representative Jim Leach, the former chairman of the House Financial Services Committee, were fully supportive of Chairman Papan's successful effort.
Chairman Leach reminded members of the California Assembly about the U.S. Congress' decision in Gramm-Leach-Bliley "not to transform the American system into one like that of the Japanese in which Keiretsu-like conglomerates are the rule."
The California legislature also had before it an extraordinary article written by Thomas J. Bliley Jr., former chairman of the U.S. House Commerce Committee. Chairman Bliley had fought hard in 1999 to keep the unitary thrift loophole open, which would have allowed Wal-Mart to buy a bank. He has since seen the light and no longer feels this is a good idea. Chairman Bliley's op ed, "A Wal-Mart Owned Bank Would Set Bad Precedent" in the August 16 American Banker, outlines why he changed his position.