Coverage Slanted against Wal-Mart on FDIC Insurance
As Wal-Mart (NYSE:WMT) faced regulatory meetings with the FDIC, wire and print media slanted their recent coverage of FDIC hearings, focusing on attacks by bankers groups wary of increased competition. Although the stores representatives said multiple times that Wal-Mart does not plan to enter full-service banking, media reports kept the company on the defensive about its plans to open an Industrial Loan Corporation (ILC). The ILC would be used to provide some financial services, including helping the company process credit transactions.
Bloomberg News reporter Lauren Coleman-Lochner opened her story by noting the opposition of community bankers who urged regulators to block Wal-Mart Stores Inc.s plan to open a bank at an unprecedented hearing on April 10. Coleman-Lochner quoted two opponents of Wal-Marts plans but left out defenders from outside the company.
The New York Timess Michael Barbaro also cast Wal-Mart on the defensive, leading his April 10 article with Wal-Marts statement that it doesnt plan to open bank branches, but rather to contract with other banks to open locations in existing stores. That promise could prove crucial to Wal-Mart, which has caused considerable protest within the banking industry, he wrote.
Still, Barbaro found it didnt please the critics. Nothing would prevent Wal-Mart from growing its banking business after gaining FDIC approval, Barbaro quoted Kenneth Redding, a bank president from Massachusetts. This has struck a nerve, Terry Jorde of the Independent Community Bankers Association added, Thousands of them.
But some finance industry insiders have said a Wal-Mart ILC would not be detrimental to the industry, and pointed out that the opposition to Wal-Mart is driven by fear of competition.
By using Wal-Mart as a soapbox, some people are arguing that ILC's [sic] are not adequately regulated, and that's just false, William Himpler of the American Financial Services Corporation (AFSA) told the Salt Lake Tribune. Neither the Post, Bloomberg News, nor The New York Times quoted AFSAs defense of the Bentonville, Ark.-based retailer.
Indeed, many American companies run ILCs, as Abigail Goldman of the Los Angeles Times reported April 10. Wal-Mart isnt breaking new ground, wrote Goldman, as several automakers such as General Motors (NYSE: GM) run their own banks, and Target Corporation, a Wal-Mart competitor, runs an ILC. Targets ILC, like Wal-Marts pending operation, is chartered by the state of Utah, reported the Associated Press.
Yet Goldman also found that in contrast to the unprecedented series of public hearings on Wal-Mart, Targets application for deposit insurance received no comment letters. Target, like Wal-Mart, operates in numerous communities where smaller banks could lose out to competition by the Target chain.
Perhaps what sets Target apart is that it has not been the effort of a concerted smear campaign waged by activist groups such as WalMartWatch.com and Wake Up Wal-Mart, both funded by Big Labor and covered favorably in the media.
While union groups are part of the coalition of strange bedfellows Goldman found aligned against Wal-Mart, neither she nor her colleagues at the Times, Post, or Bloomberg News spared much ink on their efforts. Those news outlets also failed to question whether banking groups were fighting the Wal-Mart application out of fear of competition rather than concern for the consumer.
The Business & Media Institute has previously detailed how the media have slanted coverage of Wal-Mart.