Bentonville Can’t Bank On Bernanke
Posted on March 8, 2006 by webteam
On CNBC’s “Power Lunch,” Federal Reserve Board Chair Ben Bernanke took questions about the Bank of Wal-Mart. Here are some excerpts:
Question: What is the Federal Reserve’s view of the ILC loophole?
When this exemption was created about 20 years ago, IOCs were very small and limited in number, but recently they’ve become increasingly large, increasingly part of strategies of commercial firms and they are pressing for additional powers in the congress. so this, these developments raise a couple of and fairly significant policy issues that the federal reserve has talked about in congress. first, the separation of banking in commerce. the congress has made clear that it affirmed the principle of keeping commerce and banking separate and recently—the loophole in the bank company holding act sir couple vents that principle if commerce—it doesn’t seem a good approach to allow a loophole to be the way in which that distinction breaks down.
The second concern that the Federal Reserve has raised is the lack of consolidated supervision. with banks and bank holding companies, both bank itself and the ownership, the bank holding company, are supervised in the case of an IOC, the FDIC can supervise the bank but it has no powers nor does anyone else to supervise the company that owns the IOC.
Commentator: The Fed chief talking about contentious issue number of smaller community banks by application by Wal-Mart in particular to, establish a banking arm and these ILCs. … The fear is that Wal-Mart might use it to set up a banking system within its own stores. we should note the company says it has no intention of doing that.
Click here for the Reuters story covering Bernanke’s speech before the Independent Community Bankers of America.
Click here to read excerpts from Bernanke’s testimony before the House Financial Services Committee last month.
