Few efforts illustrate the breadth of Wal-Mart's ambitions - and the fears that they at times generate - as much as a nearly decade-long drive to establish its own bank.
Yesterday, Wal-Mart Stores abruptly abandoned plans for its own bank, withdrawing its application to obtain a special banking charter after heavy criticism from lawmakers, the banking industry and watchdog groups.
"We don't plan to do this again," said Jane J. Thompson, Wal-Mart's president for financial services. "The bank is behind us. We will use our partners to roll out new products."
Wal-Mart's latest banking bid, made in July 2005, had been stalled after the Federal Deposit Insurance Corp. announced in late January that it would delay reviewing applications for so-called industrial loan corporations. And a move in Congress to bar nonfinancial companies like retailers from owning banks has been gathering steam.
Rep. Barney Frank, a co-sponsor of a bill that would prevent Wal-Mart from operating an industrial bank, said yesterday that Wal-Mart's withdrawal "doesn't remove the need for a bill," but the Massachusetts Democrat conceded that it might "dial down the temperature" for passage in the Senate.
Opposition to Wal-Mart's application initially came from bankers, who feared that Wal-Mart would eventually open traditional consumer banks that accept deposits and dispense loans.
Such a move, they argued, could wipe out small community banks and hurt profits at bigger ones, given Wal-Mart's huge economic might and record of vanquishing rival retailers.
Wal-Mart insisted that it was not interested in running a retail bank, but saw obtaining a banking charter as a way to save money by internally processing credit and debit card transactions.
But its opponents said that Wal-Mart could not be trusted. The banking application soon escalated as an issue.
In an interview, Thompson said that Wal-Mart made the decision to withdraw the bank application late last week after seeking approval from H. Lee Scott, the company's chairman and chief executive.
Wal-Mart determined that it could pursue other ways to achieve cost-savings and offer its customers more financial products without the glare of the national spotlight.
The uncertainty surrounding the FDIC's moratorium, which meant that the application could not be approved until next January, also contributed to the decision.
Wal-Mart's announcement came as a surprise to many on Capitol Hill.
Next week, the House Financial Services Committee is scheduled to hold hearings on the proposed bill sponsored by Frank, the committee's chairman, and Rep. Paul Gillmor, the Ohio Republican. It would close the remaining loopholes that allow nonfinancial institutions to operate an industrial bank and prevent existing ones from expanding.
"Wal-Mart is the proverbial red blanket in front of the bull," said Bert Ely, a banking consultant. "The blanket has now been pulled away, and I am not sure how much force there is to get this through Congress."
Wal-Mart's decision is the strongest evidence to date that the retailer's public relation's troubles are restricting its ability to grow, something that company executives are reluctant to acknowledge.