updated 3/15/2007 4:13:30 PM ET 2007-03-15T20:13:30

Wal-Mart Stores Inc. may be eyeing a larger role in banking than it has previously disclosed, according to lease details made public Thursday by a congressman who accused the world’s largest retailer of hiding plans to become a retail bank.

Wal-Mart is seeking federal approval to open a limited-purpose bank for processing credit card and other payments. Its executives have pledged in testimony to regulators that they have no plans to open bank branches or start consumer lending.

Wal-Mart’s bank effort caused so much furor last year that the Federal Deposit Insurance Corp. held a public hearing, the first ever on a license application. Critics say even a limited banking role for Wal-Mart would vest it with too much economic power.

Supporters, however, say it could help reduce fees and costs for consumers and that the industry is in need of more competition.

Rep. Paul Gillmor, R-Ohio, a leader of congressional efforts to draw a strict line between commerce and banking, released a Wal-Mart e-mail detailing lease terms with banks that rent space for branches inside hundreds of Wal-Mart stores.

The terms reserve Wal-Mart’s right to offer an array of future financial services in its stores.

The lease terms in the e-mail say Wal-Mart can offer future services including mortgages, consumer loans, home equity loans, investment and insurance products and any other type of service or product that Wal-Mart might develop.

Wal-Mart said the e-mail was nothing new and reflected similar language it has used in leases with outside banks for at least five years.

But that language was not included in other leases Gillmor has seen, his spokesman Bradley Mascho said.

One Wal-Mart lease with a community bank, obtained last year by The Associated Press and confirmed as authentic by Wal-Mart, also did not contain the same specific language.

The lease obtained by The Associated Press refers to Wal-Mart accepting various kinds of cards and offering credit cards and “other financial or investment products and services,” but does not specify consumer services laid out in the new e-mail, like mortgages and loans.

The e-mail from Larry Ellis, Wal-Mart’s leasing manager for in-store banks, said new services could be offered “in the checkout lanes, at the Customer Service Desk, through automated delivery channels, kiosks, or devices, or in any other location or format within the Store”.

Gillmor said the lease terms showed Wal-Mart is secretly planning to move into retail banking despite assurances to the contrary in testimony last year to the Federal Deposit Insurance Corp.

“The only reasonable explanation of Wal-Mart’s recent plan to revise its leases is that it plans to enter into full-scale banking,” Gillmor said at a news conference in Washington. “This latest information is the smoking gun of Wal-Mart’s dishonesty and deception.”

Wal-Mart told the FDIC last year that it wants to open an “industrial loan corporation” for the sole purpose of saving money that it now pays outside banks that process millions of payments in Wal-Mart stores by credit card, debit card or electronic check.

“The Bank has made repeated public commitments that it will not branch, and its business plan includes neither lending nor retail deposit gathering,” the retailer said in written testimony.

One of Wal-Mart’s most vocal critics, union-funded WakeUpWalMart.com, said the new e-mail proved that the retailer plans to compete with community banks across the nation if it can win FDIC approval for its limited-purpose bank.

“Wal-Mart’s denials aside, their words and actions prove once again that Wal-Mart’s banking ambitions are real and, if not stopped, would pose a dangerous and unacceptable risk to the nation’s economy,” the group said.

The FDIC in January extended for one year a moratorium on considering nonfinancial companies’ applications to establish or acquire banks, including the Wal-Mart application.

Critics say the growth of industrial loan corporations could blur the line between banking and commerce, concentrate assets in the hands of a few big companies and stifle competition.

The Associated Press and Reuters contributed to this report.

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