The Independent Community Bankers of America, long a credit union opponent and a leader in the effort to keep Wal-Mart from obtaining a bank charter, takes a very dim view of FDIC insurance covering money added to Bluebird cards.

Bluebird is the prepaid card jointly offered by American Express and Wal-Mart that carries a number of different technological innovations and, as of this week, also carries FDIC insurance and check writing capability.

“These cards are nothing more than checking accounts in prepaid clothing and need to be regulated as such,” declared Viveca Ware, the trade group's senior vice president for regulatory policy.

Ware recounted how the ICBA and individual banks and credit unions had opposed Wal-Mart being allowed to have a bank charter in 2007, only to see the giant retailer launch many bank-like products and services without a charter.

Wal-Mart has not commented on the addition of the insurance or about the charter question, largely leaving the Bluebird news to American Express. 

When the card was launched in October 2012, Amex executives said the noted card brand, which already has three banks to help fund its card offerings, would not seek to cover funds deposited on Bluebird cards with FDIC insurance, but changed their position in order to enable cardholders to directly deposit U.S. government funds onto their Bluebird cards, according to an Amex spokesman.

Government funds such Social Security and veterans benefits are only allowed to be directly deposited into accounts which carry insurance such as from the FDIC or NCUA.

The spokesman added that the funds on Bluebird cards would have “pass through” FDIC insurance through an arrangement Amex had struck with Wells Fargo Bank, which already had FDIC insurance.

Ware said the ICBA was still researching how to fight the retailer's recent Bluebird move, but noted that the CFPB is currently working on a rule covering prepaid cards. 

“We certainly will do our best to make sure the CFPB knows about these current developments,” Ware said.