ICBA AND CALIFORNIA INDEPENDENT BANKERS OPPOSE WAL-MART APPLICATION
At a hearing this week before the California Assembly Banking Committee in Sacramento, the California Independent Bankers (CIB) and the ICBA strongly opposed Wal-Mart's application to the Department of Financial Institutions commissioner to buy an industrial loan company. The witnesses called for the committee to establish a special task force to examine in detail the implications of mixing banking and commerce that this purchase would bring about.
"If Wal-Mart is successful in purchasing this tiny industrial loan company, which has all the powers of a regular bank [except they do not have DDA accounts], the safety wall between banking and commerce crumbles," declared John Brooks, president of CIB and Service 1st Bank in Tracy.
"The result," noted ICBA spokesman Tom Hawker, "is unfair allocation of credit, insidious conflicts of interests and loss of exclusive control over the payments system." Hawker serves as ICBA's treasurer and is the president of County Bank in Merced.
From the perspective of a community development banker, George McDaniel, immediate past president of Community Bank of the Bay, warned that "if Wal-Mart gets into banking, deposits will flow out of the local community like mine which is already underserved." Stephen Andrews, president of the Bank of Alameda, also testified.
In the hearing the tide of opinion ran strongly against Wal-Mart, and the committee's chairman, Lou Papan, noted in his statement that "the applicant is using the state of California and the sui generis [unique] industrial bank charter to accomplish that which it could not otherwise achieve if it attempted to acquire another California chartered financial institution. If allowed, this merger will have a detrimental impact upon banking in California and the nation."
Chairman Papan and his fellow lawmakers asked the Wal-Mart witnesses to respond to a long list of questions within two weeks. We thank Chairman Papan for bringing this dangerous Wal-Mart application into the public hearing sunlight.