Washington – The Federal Deposit Insurance Corp. on Wednesday extended for one year a moratorium on nonfinancial companies’ applications to establish or acquire banks.
The decision puts on hold pending applications from companies including Wal-Mart Stores Inc., Home Depot Inc. and DaimlerChrysler AG, and gives Congress time to consider legislation that would prohibit such companies from owning so-called industrial loan corporations, or ILCs.
Five applications from companies that appear to be financial in nature will be reviewed on a case-by-case basis, according to FDIC officials.
Critics say the growth of ILCs risks blurring the line between banking and commerce, concentrating assets in a few big companies and stifling competition.
A group of House lawmakers on Monday renewed a push for legislation that would block commercial companies from owning these special sorts of banks that have been proliferating in recent years.
The House bill is sponsored by Reps. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Paul Gillmor, an Ohio Republican. Similar legislation sailed through the House last year but is stuck in the Senate.
John Kelly, Wal-Mart’s director of financial services, said Wal-Mart’s goal is to reduce costs and save customers money by using its bank to handle the millions of credit-card, debit- card and electronic-check payments it processes each year.
There are 58 ILCs with a total of about $177 billion in assets, according to the FDIC. Of those, 48 are based in Utah or California.
