Bank of Wal-Mart? Fuck that.
The following is an e-mail I recently sent (through Wal-Mart Watch) addressing the Acting Chairman of the FDIC Board of Directors, Martin J. Gruenberg.
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Mr. Gruenberg:
We've all seen how Wal-Mart has swept through this nation with a combination of blatant greed, deception and predatory marketing tactics to become the largest corporation on the face of the planet. We've seen the stories about local businesses being driven out of existence by their inability to compete with the "big box" a mile down the road, who (not coincidentally) will raise prices on the products or services in question nearly immediately after those businesses have folded. Time and again Wal-Mart has proven that they will use any means necessary to secure their short- and long-term goals in a given community.
It's clear to me that Wal-Mart is bad for any economy which is based on competition. Rather than concentrate on providing the best value for a consumer dollar, Wal-Mart is burning both ends of the candle: They put as little as possible into the local economy through strongarm lobbying tactics and obscenely low wages (not to mention the additional financial and social strain of increasing the ranks of the medically uninsured), and the value of the product that they are selling to members of that community is, nearly without exception, substantially lower than the industry average.
Now Wal-Mart wants to do for the banking industry what it's done for retailing: Wal-Mart wants to crush it under its heel. Not only will local businesses now have to compete with Wal-Mart for customers; if Wal-Mart has its way, they'll have to go to the very company they're competing with for financing. Given Wal-Mart's poor reputation for ethical behavior, I have no doubt that they would leverage that situation to drive the competition out of business even faster by either refusing to provide financing, or, if they can't get away with that, charging exorbitant interest rates and requiring other onerous terms. In the meantime, Wal-Mart would be applying the same strategy to the banking industry that it does to retailing: Undercut your competition's prices just long enough to eliminate them, then drive prices up, cut customer service and limit product offerings to the point where you make a profit, and all the while treat your local employees like disposable cameras.
There can be no question that putting this much power in the hands of one company is a very dangerous situation; should Wal-Mart as a company begin to fail due to incompetence, natural disaster, legal action, or other unforseen circumstances, the impact on the retail and financial sectors would be devastating. The American economy would be in serious jeopardy of a Great Depression-scale collapse, as there would be no viable alternatives for retail goods, groceries, gasoline, checking accounts, credit cards, mortgages, car loans, and other vital economic components in a significant number of markets. It wouldn't mean you could no longer buy the (infamous) $3 jar of pickles, it would mean that you could very well lose your house, your car, any credit you might have, and your life savings - as I am sure that Wal-Mart will do everything in its power to avoid any regulatory restraints that would otherwise protect its customers.
All this being said, it is incomprehensible to me that the board of directors of the FDIC is considering not attending this hearing! I cannot fathom why a decision of this magnitude is not worth the effort to attend. Were I prone to conspiracy theories, I might suggest that this is another symptom of the sort of back-room deals and unethical shenanigans that Wal-Mart is (in)famous for. Wal-Mart's argument for this charter based on the fact that one of their major competitiors, Target Stores, holds a similar banking charter fails to hold water when you consider that Target Stores has one-sixth the revenue of Wal-Mart; they're not even in the same league.
Wal-Mart has its fingers in enough pies as it is. Allowing Wal-Mart to enter the financial industry would be a blunder of unimaginable proportions. The benefits of the "Bank of Wal-Mart" would only exist in the pockets of Bentonville's richest, and the risk of catastrophic damage to the American economy far outweighs them.
I urge you to deny their petition, on behalf of those of us who like having choices in our retailing (and financial) decisions.
------------
I invite your comments. I also reserve the right to tell you how wrong you are. If you would like to send a similar letter (don't send an identical one, it'll get ignored), visit this link at Wal-Mart Watch.
-----------------------------
Mr. Gruenberg:
We've all seen how Wal-Mart has swept through this nation with a combination of blatant greed, deception and predatory marketing tactics to become the largest corporation on the face of the planet. We've seen the stories about local businesses being driven out of existence by their inability to compete with the "big box" a mile down the road, who (not coincidentally) will raise prices on the products or services in question nearly immediately after those businesses have folded. Time and again Wal-Mart has proven that they will use any means necessary to secure their short- and long-term goals in a given community.
It's clear to me that Wal-Mart is bad for any economy which is based on competition. Rather than concentrate on providing the best value for a consumer dollar, Wal-Mart is burning both ends of the candle: They put as little as possible into the local economy through strongarm lobbying tactics and obscenely low wages (not to mention the additional financial and social strain of increasing the ranks of the medically uninsured), and the value of the product that they are selling to members of that community is, nearly without exception, substantially lower than the industry average.
Now Wal-Mart wants to do for the banking industry what it's done for retailing: Wal-Mart wants to crush it under its heel. Not only will local businesses now have to compete with Wal-Mart for customers; if Wal-Mart has its way, they'll have to go to the very company they're competing with for financing. Given Wal-Mart's poor reputation for ethical behavior, I have no doubt that they would leverage that situation to drive the competition out of business even faster by either refusing to provide financing, or, if they can't get away with that, charging exorbitant interest rates and requiring other onerous terms. In the meantime, Wal-Mart would be applying the same strategy to the banking industry that it does to retailing: Undercut your competition's prices just long enough to eliminate them, then drive prices up, cut customer service and limit product offerings to the point where you make a profit, and all the while treat your local employees like disposable cameras.
There can be no question that putting this much power in the hands of one company is a very dangerous situation; should Wal-Mart as a company begin to fail due to incompetence, natural disaster, legal action, or other unforseen circumstances, the impact on the retail and financial sectors would be devastating. The American economy would be in serious jeopardy of a Great Depression-scale collapse, as there would be no viable alternatives for retail goods, groceries, gasoline, checking accounts, credit cards, mortgages, car loans, and other vital economic components in a significant number of markets. It wouldn't mean you could no longer buy the (infamous) $3 jar of pickles, it would mean that you could very well lose your house, your car, any credit you might have, and your life savings - as I am sure that Wal-Mart will do everything in its power to avoid any regulatory restraints that would otherwise protect its customers.
All this being said, it is incomprehensible to me that the board of directors of the FDIC is considering not attending this hearing! I cannot fathom why a decision of this magnitude is not worth the effort to attend. Were I prone to conspiracy theories, I might suggest that this is another symptom of the sort of back-room deals and unethical shenanigans that Wal-Mart is (in)famous for. Wal-Mart's argument for this charter based on the fact that one of their major competitiors, Target Stores, holds a similar banking charter fails to hold water when you consider that Target Stores has one-sixth the revenue of Wal-Mart; they're not even in the same league.
Wal-Mart has its fingers in enough pies as it is. Allowing Wal-Mart to enter the financial industry would be a blunder of unimaginable proportions. The benefits of the "Bank of Wal-Mart" would only exist in the pockets of Bentonville's richest, and the risk of catastrophic damage to the American economy far outweighs them.
I urge you to deny their petition, on behalf of those of us who like having choices in our retailing (and financial) decisions.
------------
I invite your comments. I also reserve the right to tell you how wrong you are. If you would like to send a similar letter (don't send an identical one, it'll get ignored), visit this link at Wal-Mart Watch.
posted by Zach Burnham at 12:22 AM (click for permalink)
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