 WAL‐MART AND BANKS: SHOULD THE TWAIN MEET? A PRINCIPLES‐BASED APPROACH TO THE ISSUES OF THE SEPARATION OF BANKING AND COMMERCEContemporary Economic Policy, 2009, vol. 27, issue 4, 440-449 Abstract: The application in July 2005 by Wal‐Mart to obtain a specialized bank charter from the state of Utah and to obtain federal deposit insurance reopened a national debate concerning the separation of banking and commerce. Though Wal‐Mart withdrew its application in March 2007, the issue and the debate continue. This article offers a principles‐based approach to this issue that begins with the recognition that banks are special and that safety and soundness regulation of banks is therefore warranted. Building on that recognition, the article lays out the principle that the “examinability and supervisability” of an activity should determine if that activity should be undertaken by a bank. Even if an otherwise legitimate activity is not suitable for a bank, it should be allowed for a bank’s owners (whether the owners are individuals or a holding company), so long as the financial transactions between the bank and its owners are closely monitored by bank regulators. The implications of this set of ideas for the Wal‐Mart case and for banking and commerce generally are then discussed. (JEL G21, G28) Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:coecpo:v:27:y:2009:i:4:p:440-449 Ordering information: This journal article can be ordered from Access Statistics for this article Contemporary Economic Policy is currently edited by Brad R. Humphreys More articles in Contemporary Economic Policy from Western Economic Association International Contact information at EDIRC. |
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