Thirteen companies, a record number, have joined controversy-stirring Wal-Mart Stores Inc. in the pipeline for approval from federal regulators to establish a special kind of bank, agency records show.
The companies, which include The Home Depot Inc. and Warren Buffett's Berkshire Hathaway Inc., are seeking permission from the Federal Deposit Insurance Corp. to set up the banks, known as industrial loan corporations — products of a regulatory loophole that allows commercial companies to own a bank. The ILCs are allowed to issue credit cards, take deposits and make loans. What they cannot do is offer standard checking accounts if their assets exceed $100 million.
Wal-Mart's bid to own one — which has been before the FDIC for more than a year — sparked a wave of opposition from banks, unions, lawmakers, and consumer and community organizations. The world's largest retailer insists that it has no plans to compete with community banks and has pledged to the FDIC to stay out of branch banking and consumer lending.
Rather, the newly chartered bank would be used to handle the 140 million credit, debit card and electronic check payments it processes each year, Wal-Mart says.
The 14 companies with applications before the FDIC represent the largest number ever pending at the same time, an examination of agency records shows. The precedent was first reported Thursday by Dow Jones Newswires. Of the applicants, four have been awaiting approval for at least 11 months — longer than any company has waited since the agency began approving ILCs in 1984.
The hopefuls also include The Blue Cross and Blue Shield Association, automakers Ford Motor Co. and DaimlerChrysler AG, and information services provider Ceridian Corp.
There are now 61 ILCs in the country with a total of around $141 billion in assets and $98 billion in deposits. Thirty-three are based in Utah, one of only seven states that grant charters for them. They are federally insured, which means taxpayers would have to pick up the tab for making depositors whole if any of them failed.