SPRINGFIELD, Mass. - A now controversial bid by Wal-Mart Storesto cash checks at its Massachusetts outlets ran into flak last weekfrom both bankers and two credit union CEOs complaining, in part,about the retailer fostering unsavory "unbanked" practices.

Speaking out about a Wal-Mart license application now before theMassachusetts Division of Banking were Gary P. Fishlock, presidentof the $88 million STCU Credit Union of Springfield and James P.Nagy, president of the $75 million ValleyStone CU of Wilbraham.

Appearing before a sparsely attended hearing on the Wal-Martapplication here June 13, Fishlock accused Wal-Mart of underminingfinancial literacy and sound money management by encouraginglow-income customers to cash payroll checks, spending fundsunwisely.

The Springfield CEO also claimed Wal-Mart is being hypocriticalby claiming in its Utah industrial loan application that it wantsno part of retail banking and then turns around engaging inunhealthy financial practices impacting the unbanked.

He told the division hearing, one of seven being held across thestate this month on the Wal-Mart application for 44 licenses, thathis CU not only offers "no-fee check-cashing but seeks to educateand promote financial literacy, and sound alternatives tohigher-cost financial products."

Fishlock told Credit Union Times that he does not view theWal-Mart issue in Massachusetts as "a `bankers' or `credit union'issue but a consumer issue and staying true to our philosophy wemust continue to educate the unbanked and underserved about thebenefits of credit unions and adding 44 new check licenses inMassachusetts works counter to our goal in reducing the unbanked."Allowing Wal-Mart to have those licenses "perpetuates the problem,"he said, noting also that he agreed with similar views expressed bya banker at the Springfield hearing and in other cities earlierthis month. The Massachusetts Bankers Association has said itopposes the application as a cloaked attempt by the retailer toeventually introduce retail banking in its stores while takingadvantage of low-income consumers through "impulse buying," a viewdenied by Wal-Mart officials.

The banking lobby claims Wal-Mart check cashing discouragesconsumers from making deposits at a bank or CU.

In an account of the hearing appearing in the SpringfieldRepublican, Thomas R. Burton, president/CEO of Hampden Bank,speaking on behalf of the 210-member banker trade group, said thearea has plenty of banks and CUs offering free checking that wouldhelp low-income people save money.

Wal-Mart's low fee masks an ulterior motive, Burton said. "Theirmotivation for such cannibalistic pricing is not altruistic."

Rather, he said, check cashing at Wal-Mart will make it easierfor consumers "to spend their hard-earned paycheck atWal-Mart."

Fishlock said he asked Nagy of ValleyStone CU in Wilbraham toalso testify at the hearing though ValleyStone maintains a Wal-Martbranch in its Chicopee store.

ValleyStone, which opened the Chicopee unit more than a yearago, claims the facility has been highly successful in bringing newmember exposure to the CU.

Quoting Nagy, the Republican article on the hearing noted thatNagy told the panel he is concerned, because his small institutionjust invested "a considerable amount" to put a branch in theChicopee Wal-Mart store. Allowing Wal-Mart to add check-cashingthere would "essentially jeopardize the success of our in-storebranch to continue to serve the public," he said. Meanwhile, theMassachusetts Credit Union League, which has been monitoring thehearings, said it does plan to send a representative to a futurehearing. Officials also said the league sympathizes with Fishlock'sopinions, but that on the larger issue of Wal-Mart competition asin the Utah FDIC-ILC application, it finds fault with the bankerposition of seeking to thwart competition.

"This is an issue in which the marketplace should decide,"declared Rob Kimmett, senior vice president of the league. Thebanking lobby in typical form "seeks to regulate or legislate"competition as it sees fit. [email protected]