"There is no basis in law or experience for denying an application solely because of a proposed affiliation with a retail or other commercial firm," the retailer said in a 50-page letter to the Federal Deposit Insurance Corp. released Wednesday.
Wal-Mart has said it wants to open an industrial bank in Utah, not because it plans to offer savings or checking accounts to its customers, but to save money by handling back-office tasks such as credit card processing in-house.
But a number of critics - including some banking industry representatives and consumer advocacy groups - have opposed Wal-Mart's application because they believe Wal-Mart secretly plans to expand its services beyond credit card processing, a move many contend would hurt competing banks.
The furor over Wal-Mart's application to open an industrial bank has led the FDIC to re-examine the idea of whether retailers should be able to operate their own banks or whether commerce and banking should be kept separate.
The federal agency conducted its first-ever public hearings on Wal-Mart's applications and then placed a moratorium on approving deposit insurance for any industrial banks while it examines whether such banks pose any threat to the nation's banking system.
To open its own Utah industrial bank, Wal-Mart must gain approval from the FDIC, which grants deposit insurance required under federal law. The Utah Department of Financial Institutions also would have to approve Wal-Mart's application.
Ed Leary, commissioner of the Utah Department of Financial Institutions, said his office still has to rule whether Utah will grant Wal-Mart permission to open an industrial bank in the state.
"We haven't accepted the application as complete yet," he said.
He declined to be specific, but said Wal-Mart has to submit some additional information to state regulators.
Wal-Mart spokesman John Kelly said the retailer continues to cooperate with Utah authorities and the FDIC.
In its letter released Wednesday, Wal-Mart also underscored the fact that "two decades of history and performance demonstrate that [industrial bank] organizations pose no unusual risks or problems."
Industrial banks were authorized under an exemption in federal banking laws enacted by Congress nearly 20 years ago. That exemption gave stock brokerages, retailers and other commercial companies a way to own a federally insured bank. Utah has nearly three dozen industrial banks.
Such banks can do much of what an ordinary bank can do, such as make loans, accept deposits and issue credit cards. Those with assets less than $100 million also can offer checking accounts.
lesley@sltrib.com
