Where Wal-Mart goes, controversy follows. Such was the case back in 2005 when the company made an application to get into the banking business with the acquisition of an industrial loan company (ILC) in Utah.
Opponents came from everywhere and the vehemence of the arguments from organized groups and influential members of Congress was such that the Federal Deposit and Insurance Corporation (FDIC) placed not one but two moratoriums on all deposit insurance applications.
Until now, Wal-Mart has hung in there despite its disappointment. That, however, is no longer the case as Jane Thompson, president of Wal-Mart Financial Services, announced on Friday that the company had withdrawn its bid.
"Unlike dozens of prior ILC applications, Wal-Mart's has been surrounded by manufactured controversy since it was submitted nearly two years ago," Ms. Thompson said in a press release. "At no stage did we intend to use the ILC to establish branch banking operations as critics have suggested -- we simply sought to reduce credit and debit card transaction costs.
"Wal-Mart's financial services already save customers over $245 million a year so they can live better. Since the approval process is now likely to take years rather than months, we decided to withdraw our application to better focus on other ways to serve customers. We fully intend to continue to introduce new products and services that champion those who deserve convenient, lower priced financial services."
While banking is a no-go for Wal-Mart in the U.S., Wal-Mart de Mexico plans to open its first in-store bank in June to offer basic savings and loan services.
Discussion Questions: What is your reaction to Wal-Mart's decision to drop its bid to run an industrial loan company? What new financial products and services do you believe Jane Thompson may have been alluding to in her statement released on Friday?