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WAL-MART The Bank??
There are many people who believe the idea of a Wal-Mart Bank is really scary.
There are several good reasons why a Wal-Mart Bank would work. The economic times have changed requiring radical solutions. A Wal-Mart Bank is one result of “thinking outside the box”.It is reported that nearly two years ago Wal-Mart withdrew its application to become an industrial loan company due to the overwhelming opposition it faced from the usual anti-Wal-Mart interest groups, as well as the Federal Deposit insurance Corporation and other banks such as Bank Of America. They all feared the possibility Wal-Mart could decimate the local banks and be a substantial competitor to the bigger banks because Wal-Mart is financially healthy. As we all well know many of the largest U.S. banks, Citi and BOA, are not.
There are 4,200 Wal-Mart stores–see them as branches, in the United States. Wal-Mart already has some financial service systems in place. It would be very easy and cost effective for the company to adapt its technological infrastructure to becoming a bank; it could be more than just a clearing house for payments from customers, wholesalers and suppliers as are some of the existing money institutions like Skank Of America.
David Reilly, a columnist at Bloomberg, says,
“The cost to investors of insuring against a default by Wal- Mart on its debt, a sign of its perceived risk, is a fifth that of Citigroup Inc. and about 40 percent lower than that of JPMorgan Chase & Co.”
Wal-Mart has a banking license in Mexico. So the company has experience.
We are certain there are many more reasons why Wal-Mart as a bank isn’t such a terrible idea. We laso realize there are organizations like Skank Of America that support the statu quo. Among them are the National Association Of Realtors and the United Food & Commercial Workers Union; both groups support leaving our nation’s economic matters in the hands of the traditional banking companies.
Today Wal-Mart says they have no “strategy for banking”. Warren Buffet, super-de-duper investor expert says among other things, “This is a great time to be in banking.” We bet if given the opportunity Wal-Mart decision makers would be totally onboard.
Any company that does not have old toxic loans would find banks’ cost of capital is low when compared with the interest they can charge for loans. This would mean higher profit margins. There is opportunity to make a profit.
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