US: A Show of Hands on Wal-Mart

Wal-Mart, says the National Center for Missing and Exploited Children, is a "generous and thoughtful" partner that has helped recover 140 missing children. Maybe so, but the liberal group Americans for Democratic Action argues that Wal-Mart is "socially irresponsible" for skimping on employee wages.

A dispute over a new store? Not exactly. Instead, these two groups - and an eclectic collection of 69 more - have signed up to testify before federal regulators deciding, of all things, whether Wal-Mart can open a bank.

But like almost anything involving Wal-Mart these days, the dispute has less to do with specific legal or regulatory questions than it does with the deep rift the company has opened across the American landscape.

As a result, highly unusual hearings next month are expected to highlight the degree to which Wal-Mart "the company" has become Wal-Mart "the issue" - a topic, much like affirmative action or abortion that divides legislators, trade groups and advocacy organizations into predictably opposing camps.

To be sure, Wal-Mart's application to open a bank has aroused the interest of groups that have a direct stake in the issue like the North Dakota Bankers Association and the Community Bankers Association of Kansas. But it is considerably harder to explain the interest of the Salvation Army (for), the Utah Farmers Union (leaning against) and Jobs With Justice (against).

They are either anti-Wal-Mart because of its business practices, or pro-Wal-Mart because they like its rock-bottom pricing strategy or benefit from the retailer's charity.

The Federal Deposit Insurance Corporation, which is reviewing Wal-Mart's application, has never before held a hearing on a bank application because none have ever provoked much of a response.

The question facing regulators is whether Wal-Mart, by far the nation's largest retailer and its biggest private employer, can open a bank in Utah that would process credit and debit card transactions for its 3,500 American stores. Dozens of companies, including Target, Toyota and BMW, operate similar banks.

Wal-Mart argues that a bank would save money for itself and its shoppers by avoiding the charges imposed on credit card purchases by other financial institutions, which amount to at least $5 million a year. Opponents argue that the bank, even with its narrow focus, would allow Wal-Mart eventually to open retail banking branches that could wipe out competitors, an ambition Wal-Mart denies harboring.

In a concession to opponents, Wal-Mart said yesterday that it would no longer seek an exemption from a law requiring its proposed bank to invest in low-income communities, which could relieve some criticism.

So far, the F.D.I.C. has received a record 1,900 letters from the public on Wal-Mart's application. The first hearing, spread across two days to accommodate all the speakers, is scheduled for April 10 and 11 in Arlington, Va., just outside Washington; the second will occur April 25 in Overland Park, Kan.

Sarita Gupta, national field director for Jobs With Justice, says that Wal-Mart - with what she considers a poor record of low wages, meager benefits and the elimination of thousands of small retailers unable to compete with Wal-Mart's low prices - should not be rewarded with a bank. "Until they address these bad corporate practices," she said, "why would we allow them to expand into a new industry?"

The Salvation Army, by contrast, plans to speak in support of Wal-Mart, trumpeting the company's steady financial support for the charity's Red Kettle Christmas Campaign and Wal-Mart's rapid response to aid victims of Hurricane Katrina.

"We are not bankers and we don't pretend to be," said Maj. George Hood, in charge of national community relations at the Salvation Army. "Our focus is to be a character witness for Wal-Mart and their support for communities."

Both sides are marshaling their forces for the fight. The Salvation Army and the National Center for Missing and Exploited Children, each recipients of Wal-Mart funds, signed up to testify after they were contacted by Wal-Mart officials. Jobs for Justice and Americans for Democratic Action are working with Wakeupwalmart.com, a union-backed group also scheduled to testify.

In such a charged political atmosphere, perhaps it is no surprise that Senator Hillary Clinton, Democrat of New York, who once served on Wal-Mart's board, now says in a letter that she has "serious reservations" about the bank application. Her position is shared by several large New York financial institutions, which view banks like the one proposed by Wal-Mart - technically an industrial loan corporation - as a potential source of competition that receives relatively little scrutiny from regulators.

Plenty of regular people, unaffiliated with trade or community groups, have also weighed in, reflecting the powerful emotions Wal-Mart evokes, both pro and con.

Robert J. Pansegrau of Palm Springs, Calif., endorsed the company's banking ambitions, arguing Wal-Mart "has saved Americans billions and billions, bringing much-needed price relief to my family and friends."

"Banks that protest," he added, "are just afraid of losing their monopoly on huge fees."

But James Domenico of San Francisco wrote that he was "unequivocally opposed" to the application, describing Wal-Mart as a "rapacious and unrelenting competitor that routinely, as company policy, drives smaller competitors out of business."

A Wal-Mart spokesman, John Kelly, said the company was unfazed by all the attention or the prospect that the government hearings might become a referendum on the company, rather than its efforts to open a bank.

"I think you are going to hear attacks on the character of Wal-Mart," Mr. Kelly conceded. "We look forward to getting our position out."

• 186 Financial Services, Insurance and Banking