FDIC Declares Moratorium on Wal-Mart Bank

The FDIC has given Wal-Mart?s (and, by extension, Home Depot?s) bank bid a six-month time out.

The Fed has argued that the rapid growth of state chartered industrial banks breaches federal laws separating banking and commerce. It has also said that it will not approve any new ILCs, or any changes in ownership, or accept any new applications until after January 31. So take that.

Wal-Mart and other non-traditional bank pursuers have tried spinning their bank-bids as an ?increased range of financial services,? opponents haven?t been nearly so kind. Senator Barney Frank was quoted in the Financial Times as saying that the moratorium “has taken the right step in giving Congress the ability to consider the implications of the increasing efforts to use ILC charters to avoid the long-standing separation of banking and commerce.”

Currently, 61 industrial banks operate in seven states, owned both by financial services companies and by commercial groups including Volkswagen and BMW. There are nine applications for deposit insurance and five notices of change in control for existing ILCs pending before the FDIC.