Legislation would Close Michigan's Border to Wal-Mart Bank, says UFCW

Michigan would be off-limits to branches of a Wal-Mart bank — or any other industrial loan company (“ILC”) chartered in Utah — under legislation (HB 5884) introduced today by Rep. John Gleason (D-Flushing).

Wal-Mart, the world’s largest corporation, has applied for an ILC bank charter in Utah. An ILC is a financial institution that can be owned by a retail company due to a loophole in federal law. “Michigan has a reciprocal banking agreement with Utah that would allow Wal-Mart to immediately open branches in this state, leaving working people and community banks exposed to the same predatory practices that have forced thousands of small retailers, convenience stores, grocers and other locally-owned small businesses to close their doors,” said Robert Potter, president of United Food and Commercial Workers Local 951, which opposes any expansion of Wal-Mart’s dominance in the retailing sector.

“My legislation will protect Michigan banks and Michigan consumers from out-of-state banks that don’t have to play by the same rules,” Rep. Gleason said. “Owners of ILCs avoid regulations that apply to owners of full-service banks. If the state of Utah is irresponsible enough to let a company like Wal-Mart operate an ILC in their state, that is their business — but we will not allow it to happen here.”

“Wal-Mart has a history of harming local communities by running local enterprises out of business,” Potter said. “Wal-Mart’s pattern is to enter local communities and use predatory pricing and other techniques to run its competitors into the ground. There is no reason to believe this company will not engage in the same practices to build a new empire in banking. ‘Wal-Mart Bank’ would likely prey on low-income workers and drive small community banks out of business.”

Current Michigan law gives ILCs chartered in about 20 states — including Utah — the right to open branches here. In return, these states give our state-chartered banks the same privilege. With a highly-favorable banking code, Utah has become home to 60 percent of the nation’s ILCs — and its state treasury has profited from an extremely high ILC tax rate.

“Once chartered in Utah, ‘Wal-Mart bank’ would immediately be permitted to branch into Michigan and leverage its market strength to run small banks out of business,” Potter said. “We simply can’t let Wal-Mart run our state’s financial institutions out of business like they have done to thousands of convenience stores, grocers, pharmacies, hardware stores, florists and countless other small businesses. We applaud Rep. Gleason’s support of workers and his courage in standing up to Wal-Mart. We urge every legislator, regardless of political affiliation, to take the same stand in support of low-income workers and small community banks.”

“Michigan must send Utah a strong message that we believe granting Wal-Mart an ILC charter violates the privilege and the trust we have shown them through our state reciprocal branching law,” Rep. Gleason said. “My bill will protect Michigan’s interests by closing our state to Utah-chartered banks, and protect Michigan citizens and Michigan banks from the unfair practices that Utah seems to support.”