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OVERLAND PARK, Kan. – Credit union interest in the outcome of Wal-Mart Stores’ application for an industrial loan bank in Utah remained high last week with both regulators and trade group executives attending the last of the Federal Deposit Insurance Corp. hearings on deposit insurance. After a daylong session in which Wal-Mart was attacked by banker, labor and community groups as it was three weeks ago in Arlington, Va., CU reps and analysts were holding to their earlier forecasts that the FDIC would conditionally approve the retailer’s bid for an ILC to serve its debit and credit card processing. “Even though there is that huge response, my guess is that the FDIC will ultimately approve the application on its merits with the limitations on branching considering it’s pretty similar to what Target received,” commented Darren Williams, president/CEO of Wescom CU in Pasadena, Calif., referring to an existing Utah ILC owned by the discount chain. Wescom’s interest in FDIC action on Wal-Mart is keen based on an ILC application filed with the agency and California regulators in February as part of a deal to purchase credit card portfolios. Wescom is joined by PSCU Financial Services in plans to acquire La Jolla, Calif.-based Silvergate Capital, Corp., parent of Silvergate Bank, whose prime business is commercial real estate lending. Based on hearing testimony here and in Virginia, Williams said he saw no “significant impact” to the Wescom/PSCU ILC bid. “Our applications remain pending,” added the Wescom CEO who attended the first two days of Virginia FDIC hearings in early April. In the audience at the hearings held in this Kansas City suburb were Darryle Rude, of Salt Lake City and the top ILC regulator for the Utah Department of Financial Institutions, and Jerel Wright, assistant vice president of governmental and public affairs for the Kansas Credit Union Association. Wright, who was to be joined by a contingent of CEOs from Kansas CUs, said he was attending the sessions to learn more of banking’s strategy in attacking competitors. It is important, said Wright, a former regulator himself, to listen carefully to the anti-competitive message conveyed by an array of small town bankers on the witness list. The complaining bankers hailed from as far away as Minnesota and Kentucky. “We thought it’s important to relate to legislators that it’s the same standard message of bankers objecting to competition whether it is Wal-Mart, PCAs or Farm Credit Banks,” said Wright. “How credible can their message be?” he asked. John Smith, the top CU regulator in Kansas and who succeeded Wright, said also that while “this is a banking issue, credit unions do need to be aware of industrial loan corporations.” They need to understand, he said, the potential of mixing commerce and banking. In a separate development, the $413 million Dade County FCU of Miami announced this week it is opening its second Wal-Mart branch in a Miami Gardens store in June and like other Florida CUs active with branches of the retailer, it has long-term leases and “is not about to second guess” whether or if management might force the CU out or create direct competition. Dade County has two five-year leases on its Wal-Mart branches with five-year options to renew. “We are taking Wal-Mart at their word – that they are telling the truth,” said George Joseph, president/CEO. But if down the road conditions change and Wal-Mart gets clearance to open a branch, “then good for them-it’s good for competition.” “The consumer would be the beneficiary” and what’s wrong with that, said Joseph. But in the meantime Dade County CU expects to be the prime provider of most favored products and loan rates. Joseph also discounted arguments by some CEOs that Wal-Mart facilities and similar grocery outlets are too transaction oriented. “We’re getting good loan business from our branches,” he concluded. -

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