WASHINGTON -- Wal-Mart Stores Inc. confirmed yesterday that it is seeking a senior manager to oversee "new strategic initiatives" in the mortgage business, but said the move does not signal an expansion into retail banking.
Some bankers, lawmakers and Wall Street analysts disagreed, saying they believe the executive search shows the retail giant is planning to move into full-service banking, despite promises to the contrary to federal regulators.
"This is the smoking gun. What more do you need?" asked Camden R. Fine, chief executive of the Independent Community Bankers of America.
The trade group, which represents small banks, is fighting Wal-Mart's application to the Federal Deposit Insurance Corp. for permission to start a small, special-purpose bank.
Community bankers say Wal-Mart is being deceptive when it tells regulators it wants government-backed insurance only to operate a limited bank, known as an industrial loan company, or ILC, to process its own stores' credit and debit card and electronic-check payments.
They fear that Wal-Mart will expand to become a full-service, nationwide banking operation capable of wiping out competing banks in small towns by undercutting their prices.
Wal-Mart spokesman Martin Heires said interpreting the company's executive search as proof of a move into commercial banking is "absolutely off base."
He said the search is related to an employee benefit program to help Wal-Mart workers in 43 states obtain relatively cheap home mortgages. By joining forces with Nationwide Advantage Mortgage Co., Wal-Mart already offers its employees lower closing costs, reduced paperwork and quicker decisions on loans, Heires said.
The new executive would help expand that program, as well as improve existing programs offering customers simple financial services such as money orders, money transfers and credit cards through banking partners, he said.
Those basic services don't require federal insurance. Wal-Mart critics say the FDIC, which is currently weighing Wal-Mart's application for an ILC, should maintain the legal wall that has long separated commercial companies from banks.
Earlier this week, Wal-Mart was faced with a new round of criticism when Reuters reported inaccuracies in the retailer's testimony to the FDIC.
The company had told regulators it couldn't realistically expand into commercial banking because it already has long-term leases with banks that operate branches in its stores.
