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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26051
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| Title: | Should Wal-Mart, Real Estate Brokers, and Banks Be in Bed Together? A
Principles-Based Approach to the Issues of the Separation of Banking and Commerce |
| Authors: | White, Lawrence J. |
| Keywords: | Wal-Mart
real estate brokerage
banking and commerce
safety-and-soundness regulation |
| Issue Date: | 5-Jul-2007 |
| Series/Report no.: | EC-07-21 |
| Abstract: | The application in July 2005 by Wal-Mart to obtain a specialized bank
charter from the state of Utah and to obtain federal deposit insurance
re-opened a national debate concerning the separation of banking and
commerce. Simultaneously, bank regulators were considering the
possibility of allowing banks to enter the area of residential real
estate brokerage, which is another facet of the same set of issues.
Though Wal-Mart withdrew its application in March 2007, the issues and
the debate continue. This paper offers a principles-based approach to
these issues that begins with the recognition that banks are special and
that safety-and-soundness regulation of banks is therefore warranted.
Building on that recognition, the paper lays out the principle that the
“examinability and supervisability” of an activity should
determine if it should be undertaken by a bank or by a bank’s
owners. Even if an otherwise legitimate activity is not suitable for a
bank, it should be allowed for a bank’s owners (whether the owners
are individuals or a holding company), so long as the financial
transactions between the bank and its owners are closely monitored by
bank regulators. The implications of this set of ideas for the Wal-Mart
case, for real estate brokerage, and for banking and commerce generally
are then discussed. |
| URI: | http://hdl.handle.net/2451/26051 |
| Appears in Collections: | Economics Working Papers
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