"There's been a lot of interest in this application," Federal Deposit Insurance Corp. spokesman David Barr said.
American Federation of Labor and Congress of Industrial Organizations President John Sweeney, asked the FDIC to reject the Bentonville, Ark.-based company's bid to open an industrial loan corporation in Salt Lake City. Utah is one of five states where commercial firms may own such companies.
"A Wal-Mart-owned bank will create increased risk to the federal deposit insurance system," Sweeney said in a letter.
The extended comment period, until Sept. 30 from late August, will not delay the regulator's decision-making process, which is expected to take between four months and a year from the time the application was announced in July, Barr said. The FDIC will also post public portions of the application on its website.
Sweeney said allegations of gender discrimination at Wal-Mart and investigations into the behavior of a former senior executive suggest the company would not abide by banking rules.
A Wal-Mart spokesman said the company has acknowledged past errors and corrected them. In addition, Wal-Mart plans to use the institution solely to process the estimated 140 million electronic payments it receives every month, company spokesman Marty Heires said.
"A lot of people have read a whole lot into this application," he said.
Opening an industrial loan corporation is one of the few avenues open to a commercial firm like Wal-Mart for owning a financial institution. There are currently 58 industrial loan corporations, including one owned by Wal-Mart rival Target Corp., a regulatory official said.
Wal-Mart's application has rekindled fears that the retailing giant, which draws in more than 100 million U.S. customers each week, is seeking permission to open a special-purpose financial institution as a way to extend its dominance into banking.
"As the world's largest retailer, Wal-Mart could easily become one of the largest banks in the U.S., intensifying concerns regarding the mixing of banking and commerce," Sweeney said.
Federal Reserve Chairman Alan Greenspan has expressed concern that the parent companies of industrial loan corporations do not face the same oversight as bank and financial holding companies. FDIC officials say their supervision of industrial loan corporations and their parents is adequate.
An official of the Independent Community Bankers of America said the trade association would file an objection to the retailer's bid.
Wal-Mart applied to state and federal regulators to open a bank in Salt Lake City to process debit, credit and electronic check transactions. The company currently pays fees to other financial institutions to process each one.
"The savings from capturing these fees could be returned to customers in the form of lower prices," Jane Thompson, president of Wal-Mart Financial Services, said in July.
Regulators and legislators have blocked previous attempts by Wal-Mart to acquire banks or industrial loan corporations.
