Bank of Wal-Mart: Better Than Loan Sharks
Posted on July 9, 2007 by webteam
Wal-Mart’s bank gets hotly debated in BusinessWeek and Advertising Age today. The main argument in favor of the company getting into banking? It’d be better than loan sharks.
In a classic case of being the lesser of two evils, Wal-Mart’s financial services are a far cry from the poverty cure Advertising Age paints them to be. While it’s true that Wal-Mart’s rates are lower than check cashing services, neither are sustainable routes to fiscal solvency for low-income shoppers. The fact remains, as Advertising Age points out, that exploiting the poor is a big market and is indeed one of the ways Wal-Mart makes its billions.
Wal-Mart: Stay Out of Banking, Period [BusinessWeek]
Pro: Not in the Best Interest
The Independent Community Bankers of America (ICBA), representing 5,000 small financial institutions nationwide, strongly opposes the entry of commercial enterprises such as Wal-Mart (WMT) into retail banking. ICBA has nothing against Wal-Mart stores, just Wal-Mart banks.Con: Simply Filling a Need
The hue and cry over Wal-Mart’s attempts to expand its financial-services business is largely motivated by a single fact: The company will offer these services at a lower cost to the consumer, taking revenue away from competitors that happen to include banks. So what else is new?
Forget Going Upscale—Wal-Mart Should Serve Needs of Poor, Seniors [Advertising Age]
Serving the poor is a big market, and providers like to say how proud they are to give credit and debt products to people who couldn’t get them from traditional lenders. But the interest they have to pay for such services is astronomical, and many people are left holding the bag for thousands of dollars in interest or being unable to pay their mortgages, leading to the current subprime-lending mess.
