More Relying on Walmart for Financial Services
11th July 2014
The world’s largest retailer, best known for low prices on everything from detergent to dining room sets, has become a significant player in the financial services market by doing what it does best: cut costs and appeal to budget-conscious shoppers.
Cue Democrat angst.
“It’s cheaper than anything out there and there are no overdraft fees,” he said of Walmart. “I’ve never had a problem.”
But bank executives do. They say that Walmart can offer low prices on financial services because the chain has cherry-picked services not subject to the layers of regulation that banks face.
Unlike check-cashing services, banks are required to lend in urban and suburban communities, provide direct insurance on deposits, and make detailed reports to several federal and state agencies, said Richard Holbrook, chairman of the Massachusetts Bankers Association and chief executive at Eastern Bank.
“We’re not afraid of competition,” Holbrook said. “We just want to make sure the rules are the same.”
Future of Capitalism can read between the lines:
The line “we’re not afraid of competition” from that banker made me chuckle. Of course he’s afraid of competition, which is why the banks are working to get regulators to prevent Walmart from competing with them. The regulators will probably do what the banks ask, and pile more rules on Walmart, because the competition from Walmart demonstrates that competition works better for consumers than regulation does, which is not a point regulators are eager to make. Notice that when people say “we just want to make sure the rules are the same,” they usually aren’t talking about reducing rules, but increasing them.