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One answer to bank crisis: Wal-Mart
Commentator Todd Buchholz
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TEXT OF COMMENTARY
Bob Moon: Citigroup and AIG are still teetering on the edge of failure and credit markets are still tight. So what should we try next to stabilize the financial services industry? Well, economist Todd Buchholz suggests the answer might be letting a new player into the game.
Todd Buchholz: We've run out of escape routes for our banking crisis. Citibank has been swallowed up by the American taxpayer -- and by sheiks in Saudi Arabia and Abu Dhabi. Bank of America can't digest Merrill Lynch and the million-dollar window treatments in Merrill's CEO suite.
President Obama has already corralled the big three: Paul Volcker, Warren Buffett, Prince Walid bin-Talal. But one more player, perfectly positioned, has not been called on: Wal-Mart. Yes, our national retailer offers three things in short supply: cash, respect, and a super-sharp pencil when it comes to cost control.
A few years ago, Wal-Mart tried to enter banking but was hounded by social critics and fearful competitors worrying that the retail giant was simply too powerful and too anti-union to get certified as a bank.
But this anti-Wal-Mart bias makes no sense in banking. Wal-Mart critics accuse the company of cannibalizing local downtown merchants. But most Americans don't drive to a downtown bank anyway. Critics hate Wal-Mart for buying too many socks and shoes from China. Well, let's face it, America's banks already depend on China's thrifty savers. Critics condemn Wal-Mart's non-union status. Well, I've never seen a unionized teller at a Citibank window, have you? I don't think ATM robots are unionized either.
Finally, Wal-Mart-haters accuse the firm of wasting natural resources, you know, too much Styrofoam and plastic. I'm sure we could get Wal-Mart bankers to promise not to give away lollipops with plastic wrappers on them.
The point is, the U.S. needs some strong entities to enter banking, so we don't have to prop up failures or beg foreign sheiks and potentates for help. Moreover, Wal-Mart might actually help customers. Its 3,800 stores have already driven down the price of wire transfers and check-cashing.
Maybe they could drive down the cost of the endless bailouts coming from Washington.
Let's face it: This would be a tough call for President Obama. But, hey, we're all looking for the real change he promised -- more than spare change, I hope.
Moon: Todd Buchholz is the former White House economic advisor to the first President Bush. His latest book is "New Ideas From Dead CEOs."
I think letting walmart enter the US banking industry is a great idea, why hasnt your article reached the presidents desk? ..... Also many of the failed banks in this country should be picked up by all the bigger banks so this way walmart is always competing with them to keep competitive..
A far better alternative: thousands of community-based common good banks (see http://commongoodbank.com).
Yes, dear 'anonymous coward,' believe it or not even a few of us conservatives listen to NPR on occasion. It is perhaps from a desire to expand our world view. It is an approach to life worth considering - even for progressives.
At issue with Wal-Mart Bank charter application were a host of financial, regulatory and social issues, as you well know. It is worth noting that in many of their Supercenters they do provide banking services short of taking deposits and making loans. These services, which include check cashing and the processing of remittances, are the same things that the unbanked most often use at more predatory rates from firms that are less interested in their reputation in the community. The folks who use these services generally tend to come from the ranks of undocumented workers. Were I in their position, I'd rather cash my paycheck there, send some home, pay my bills and buy the food, medicine and clothing I need. IT is preferable to walking out of a 'check cashing' store in a bad neighborhood with a pocket full of cash and risk being robbed of my hard earned pay before I had a chance to use it for life's necessities. Perhaps a bank in a Wal-Mart that could accept their deposits is not another apocalypse.
1. WalMart is efficient yes, but it is a blind efficiency that has deleted the American factory job because they (along with other mega-retailers) have bought a majority of their goods from other countries. So, we see that in a way, WalMart has done a good job, but only with one set of numbers, ie WalMart profits...but WalMart has done a horrible job acknowledging its potential impact upon the base of the domestic economy: the American working class.
2. WalMart is not our "national" retailer. WalMart is a private corporation that is not acting in the interest of the people of the US nation. They are acting in the interests of shareholders, so let's not bring the warm glow of Nationalism into this picture.
Mr Tom,
The reason people didn't want Wal-mart to go into banking was because it would become an (even more) gigantic monopoly. Not because of the ordinary reasons people protest wal-mart. It would be like Coke buying a line of gas stations, or Ford buying all the Chevy dealerships, or Microsoft opening retail sto.. oh wait....
I thought that capitalism was supposed to protect the 'little guy', you know, the thousands of small, regional banks that are still around, the ones, you know, that were not "too big to fail"..... the ones that didn't give out liars loans or engage in fraud with ratings agencies.
My first question is what happens when Wal-Mart goes under, do we get to decide that it is "too big to fail" as well?
My second question is, what is next? Wal-mart buys GM? Do you want to repeal every monopoly law ever written? Do you want to go back to AT&T (please, let me remind you, that without monopoly laws, AT&T could have continued to ban 3rd party companies from making things like modems... what im trying to say, is, there would be no internet)
Im trying to figure out why you were an advisor to Bush, and why even the most drug addled college junior could probably understand more about the issue of wal-mart banking than you display in your horribly myopic and ideologically obsessed rant.
Please NPR if you want to put conservatives on the air, put some on that have actually bothered to study the issue.
Better answer; smaller is better. Break these huge corporations down. Utilize the antitrust framework that once was. Frankly, the economy needs to shed many of these companies along with their terrible business ethics and overpowering greed. Some will fail... so let them. That's how capitalism is supposed to work, however when you have a lack of diversity, you breed weakness. We have been practicing the economic equivalent of incest. Broaden the gene pool here, its grown too stale. Give people real choices, not the same choice re-branded.
