Washington, D.C. – Today, Congresswoman Stephanie Tubbs Jones (D-OH) praised the Board of the Federal Deposit Insurance Corporation (FDIC) on its decision to issue a moratorium on applications for deposit insurance by Industrial Loan Corporations (ILCs), and notices of change in bank control for existing ILCs.   Congresswoman Tubbs Jones and over 100 Members of Congress have opposed Wal-Mart’s application for federal deposit insurance to operate an ILC.

“I commend the FDIC on its thoughtful and measured review of Wal-Mart’s application, and ILC expansion. Wal-Mart’s entry into banking poses a risk to the banking system because no regulator would oversee Wal-Mart Stores, Inc.  Just think if Enron had owned a bank.  The company’s failure would have caused losses to the FDIC insurance fund, in addition to consumers, shareholders, and small businesses.  Wal-Mart should not be given direct access to our nation’s payments system. ILC expansion is a loophole in our banking system that poses risks Congress never intended,” stated Rep. Tubbs Jones.  

Long-standing U.S. policy separates the activities of banking and commerce which protects the safety and soundness of the financial system and the FDIC insurance fund. ILCs are exempt from these provisions. Speaking on behalf of over 100 colleagues in an April 10, 2006  FDIC hearing, Congresswoman Tubbs Jones opposed Wal-Mart’s application to operate an ILC on the grounds that it would concentrate commercial and financial power and might distort the allocation of capital.  She argued that nothing would prevent the world’s second largest corporation from forcing vendors to use its payments processing services, or driving community banks from the market.  

In addition to members of the House and Senate, Wal-Mart’s entry into banking is opposed by a broad coalition comprising community banks, labor unions, fair trade, and consumer advocacy organizations.  “Today's action by the FDIC means that the Commission is seriously considering the adverse effect on safety and soundness posed by the ILC loophole,” said Rep. Tubbs Jones. “It is my hope that Congress will address this issue.”