Wal-Mart Stores Inc. has pulled its application to charter an industrial loan company, the Federal Deposit Insurance Corp. confirmed Friday.
The retail giant is expected to pursue financial services activities, such as offering consumer loans, through either state licenses or indirectly through partners, sources said.
A Wal-Mart spokesman did not return calls seeking comment.
But FDIC Chairman Sheila Bair said the company "made a wise choice."
"This decision will remove the controversy surrounding their intentions," she said in a press release. "They don't need an ILC to play an important role in expanding access to financial services by partnering with banks and others. We look forward to working with Wal-Mart in meeting the need for low-cost financial services across all populations."
Wal-Mart is expected to make its own announcement soon. The decision may slow the momentum of legislation introduced by House Financial Services Committee Chairman Barney Frank that would ban commercial companies from owning ILCs. A hearing on the bill is set for March 22 and Rep. Frank has said the panel would vote on the bill before the end of the month.
Wal-Mart applied in July 2005 to charter an ILC in Utah. Though several other commercial firms, including Target Corp., already own ILCs, Wal-Mart's charter sparked fierce resistance from community bankers and labor unions.
Wal-Mart has repeatedly claimed that it did not want to use the ILC to open branches in its stores, but instead would use it for debit and credit card processing. Community bankers said they did not believe Wal-Mart and urged the Federal Deposit Insurance Corp. to deny the application.
Instead, the FDIC issued a six-month moratorium last year on all ILC applications while they studied their legal and regulatory authority over them. When that moratorium expired on Jan. 31, the FDIC extended it for any commercial applicant until Jan. 31, 2008.
