CHICAGO, IL -- (Marketwired) -- 05/27/13 -- As a member of the banking industry, Republic Bank of Chicago Halikias company, is well versed in the rules and regulations it must follow. A recent article posted by Bloomberg discusses the concerns that banks have over Wal-Mart's venture into financial services. Banks are fighting to ensure fair practices are established for all involved.
At a December meeting of the Federal Reserve, a group of bankers brought up the topic of Wal-Mart's sale of prepaid debit cards. This group represents the Federal Advisory Council. Minutes from the meeting detail that members feel that Wal-Mart many not face the same stringent oversight by the government that traditional banks receive. According to the article, council members stated, "Wal-Mart has sought to enter banking formally for over a decade. Faced with opposition, Wal-Mart now appears to have entered banking through the back door, without the regulatory framework that applies to banks."
The debate over Wal-Mart's financial services has existed for some time. The Federal Advisory Council suggested "limiting payment-related services to 'regulated banking institutions,'" or increasing its study of the business. In 2005, Wal-Mart applied to open a limited-service, Utah-based bank, but upon opposition, ceased its efforts. Wal-Mart, Target, and Home Depot did win against banks regarding debit-card swipe fees, however. The Federal Reserve curbed these fees, which the corporations pay to banks.
Wal-Mart has continued its foray into financial services by offering a pre-paid card called Bluebird. It offers this service as a partnership with American Express Co. The retailer also has a similar card in conjunction with JPMorgan Chase & Co. The article includes a comment from Deisha Barnett, a Wal-Mart spokeswoman. In an e-mail she stated, "The financial services products offered at Wal-Mart stores are properly regulated. In many cases, the regulated entity is the financial services partner."
Many banks disagree. The store markets the cards as a "debit and checking alternative." Banks argue that these cards compete with traditional bank accounts. The cards are exempt from the Federal Reserve's interchange rules. These rules govern the fees that retailers pay banks. Wal-Mart fought for lower fees and is now indirectly benefitting from these fees. Banks face competition from companies that provide check cashing, bill payment, money transfers, and prepaid cards, especially since they are not subject to the same regulations and scrutiny as traditional banks.
Republic Bank of Chicago, Halikias company supports tougher regulations for companies such as Wal-Mart. "The business of prepaid cards is new and unregulated," explains a bank representative. "Many are trying to get in on it -- banks and non-banks. Retailers such as Wal-Mart will collect deposits through direct deposit accounts, and receive fees for its lending activities through its credit cards. Companies engaged in collecting deposits and lending money are by definition banks. Banks are not allowed to be involved in banking and commercial activities. It appears that retailers, such as Wal-Mart, are involved in both, yet are not subject to the same regulatory scrutiny as banks." Republic Bank of Chicago, Halikias company, is committed to following all rules and regulations set forth for financial institutions.
Republic Bank of Chicago Halikias-owned banks, offers customers creative financial solutions to meet their needs. With 16 branch locations, they are conveniently located through the Chicago area. Branches play an active role in their communities, building a strong rapport with citizens and other organizations. The organization is defined by the FDIC as a "Well Capitalized" financial institution.
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