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Big-box banks targeted

Bill would block stores from running financial institutions

April M. Washington, Rocky Mountain News

Published January 17, 2007 at midnight

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A bill that would block Wal-Mart and Home Depot from owning and operating banks in their Colorado stores sailed through a Senate committee Tuesday.

The move to protect small community banks from what some call the predatory practices of "big box" stores comes as the two retail giants seek to charter and operate banks in their stores across the nation.

"Community banks cannot compete against Wal-Mart," said Barbara Walker, executive officer of Independent Bankers of Colorado. "Just as it has wiped out mom-and- pop stores in Main Street America, it will wipe out small community banks."

A Wal-Mart spokesman was unavailable for comment after hours.

Senate Bill 40, sponsored by Sen. Lois Tochtrop, D-Thornton, and Rep. Rosemary Marshall, D-Denver, would ban retailers from operating affiliated industrial banks. The measure is aimed at closing a loophole in federal banking laws. "We're trying to pre-empt something before it happens," Tochtrop said.

Industrial loan companies, or ILCs, can offer nearly the same financial services as traditional chartered banks, but with much less scrutiny and oversight, said Walker.

The Senate Business, Labor and Technology Committee voted 6-1 to send the measure to the full Senate.

Similar legislation will be introduced in the House.

The lone dissenting Republican, Sen. Jack Taylor, of Steamboat Springs, rejected claims of a potential banking monopoly.

"It's implied that in a small community, the big-box stores could reduce them down to one bank," he said. "I'm having trouble accepting the argument."

But Don A. Childears, president and CEO of the Colorado Bankers Association, said, "If big-box had its own financial institution inside, in time it could be the only financial institution in a small community."

Sen. Stephanie Takis, D-Aurora, sought assurance that unaffiliated credit unions and banks such as First Bank could continue to lease space within stores such as Safeway and King Soopers. The measure allows for that, supporters said.

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