What’s Wrong With a Wal-Mart Bank?

Robert Reich argues in favor of letting Wal-Mart enter the banking sector, in The American Prospect.

Most Wal-Mart watchers (including the entire U.S. financial industry) don’t believe Wal-Mart. They see this move as the Wal-Mart camel’s nose under the tent of commercial banking. First come credit-card services on Wal-Mart sales, then discounted credit-card services on other sales, then commercial deposits and loans. Presto. Before you know it, Wal-Mart is a full-service commercial bank.

I say, let Wal-Mart under the tent. Commercial banking is now one of the stodgiest and least-competitive parts of the American economy. Fees and prices are way too high. Service is lousy. The industry needs a shakeup. Have you ever had a bank give itself an interest-free “float” on your money while you waited two weeks for a check to clear? Have you ever filled out twenty-five forms to get a simple bank loan? Have you ever collected anything close to fair interest on money you keep in your checking account?

I guarantee you Wal-Mart’s low-price business model will force complacent bankers to do better.

Also bear in mind many Wal-Mart customers don’t have much money. They need cut-rate banking services. Many of these folks are excluded from mainstream banking. They don’t even have bank accounts. Wal-Mart could help them.