Who would have thought that one of the nation’s most successful firms, renowned for helping consumers by offering low prices and decent jobs, would become a lightning rod for so many disgruntled people?
Once again, during hearings this week at the Federal Deposit Insurance Corp. in Washington, D.C., we see that mere mention of the name Wal-Mart is enough to bring out angry activists opposed to whatever that company — No. 2 on the list of the Fortune 500 — is proposing. Wal-Mart is now planning to do what several other retailers do, which is get involved in banking and financial services.
As the Washington Post reported, “Wal-Mart wants to use its proposed bank for the limited purpose of lowering the costs of its backroom processing of check and credit-card transactions and to offer high-interest certificates of deposit.” Wal-Mart officials told the FDIC, which must give the OK before Wal-Mart starts a state-chartered industrial loan corporation based in Utah, that it does not plan to open bank branches in its stores, but instead will continue to rent out space to various other banks.
What would be the downside if Wal-Mart added some competition in the bank industry? Likely, its involvement would lead to lower fees, better interest rates for customers and a more efficient operation. Usually, federal regulators complain about companies charging too-high fees to consumers. But when a company with a known reputation for cutting costs proposes to expand into the financial markets, those same regulators hold hearings to let Wal-Mart haters and potential competitors whine and complain.
This is the first time in the FDIC’s 73-year history that the agency has held hearings on such a proposal, the Post reported. That in itself is a reflection of the depth of anti-Wal-Mart sentiment. The complainers ranged from small banks that, naturally, fear possible competition from the low-cost king. Others represented the vast array of union and liberal activist groups that have turned Wal-Mart-hating into a cottage industry, complaining about “insufficient” wages and health care benefits. They ignore that Wal-Mart offers jobs to people who want them at competitive wages. Forcing Wal-Mart to hike wages and benefits beyond what the market demands will only make it harder for people to get jobs there and will raise prices.
Wal-Mart has simply committed the crime of being too successful.
“Given Wal-Mart’s massive scope and international dealings, it is not possible to rule out a financial crisis within the company that could damage the bank and severely disrupt the flow of payments throughout the financial system,” Rep. Stephanie Tubbs Jones, D-Ohio, told the Washington Times.
That sounds a bit conspiratorial and not at all realistic. The more likely result would be lower prices for consumers. Let’s hope the FDIC gives the company a prompt approval.