Bankers may not be squaring off against Wal-Mart in regard to the Consumer Financial Protection Bureau, but they will be watching to see how and when the retailer will fall under the Bureau’s oversight.
“When last we checked in on the banking industry’s fight with retailers over the Dodd-Frank Act, the banks had lost their battle against caps on debit-card fees. Now U.S. lenders are squaring off against the world’s largest retailer, Wal-Mart Stores,” Bloomberg BusinessWeek reported on Aug. 11.
The article continued:
The banking industry is arguing that the Consumer Financial Protection Bureau, created by Dodd-Frank, should be able to regulate Wal-Mart, because the retailer qualifies as a so-called larger participant in financial services under the act. … ‘If you’re going to play in the financial sector, you play by the rules,’ says Richard Hunt, president of the Consumer Bankers Assn., a lobby group that represents retail banks.
However, other national bankers associations aren’t being as direct in their comments, at least publicly. When asked about the issue, American Bankers Association spokesperson Jeff Sigmund pointed out recent comments on non-banks in general.
In his testimony before the Senate, Committee on Banking, Housing, and Urban Affairs on July 19, American Bankers Association Chairman-Elect Albert C. Kelly pointed out the need to direct it resources “to the glaring gap in regulatory oversight – a failure to supervise and pursue available enforcement remedies against non-bank lenders committing predatory practices or other consumer protection violations.” Kelly is chairman and CEO of SpiritBank in Barstow, Okla.
“It doesn’t look like we’ve said much about this,” Independent Community Bankers of America spokesperson Aleis Stokes told CFPB Journal when asked if her organization had commented on Wal-Mart.
For now, bankers must wait and see. The Credit Union National Association, along with the ICBA, the AFL-CIO and several other industry and consumer groups met with the CFPB over the summer to discuss non-bank larger participants in the marketplace. “The CFPB is holding additional meetings with more than 100 organizations,” CUNA reported.
“Elizabeth Warren … hinted that Wal-Mart would fall under the agency’s supervision at a meeting with industry and consumer groups in early July, according to one person who attended and spoke on condition of anonymity because the session wasn’t public,” according to Bloomberg.
Wal-Mart is one of the country’s biggest non-bank financial services providers, offering check-cashing, bill payment, wire transfers and other services through its in-store MoneyCenters. Some say its entry into the U.S. banking market is inevitable. The company already has banking licenses in Canada and Mexico.
“The company downplays its desire to garner a banking license, but recent changes in the banking and regulatory landscape have only increased the eventual likelihood of a Wal-Mart Bank,” CNNMoney noted in June 2010. A finance professor noted that Wal-Mart has the necessary capital and a balance sheet that is stronger than many commercial banks – and it serves an ignored market.
American Banker also wrote about the possibility of Wal-Mart as a bank, which could put it in a different category of CFPB-regulated institutions: too big to fail.
As it stands now, Wal-Mart would not be alone as a retailer offering financial services that the CFPB will eventually regulate. Others – Best Buy, Home Depot, Lowe’s, and recent newcomer Kmart – offer check-cashing, money transfers and other services that fall under the CFPB’s oversight.