FDIC: Moratorium on ILC Charters

David Enrich and Damian Paletta of Dow Jones Newswire report this afternoon:

In a move that could hurt Wal-Mart Stores Inc.'s (WMT) chance to obtain banking powers, the Federal Deposit Insurance Corp. said Friday it was placing a six-month moratorium on all industrial bank applications because of concerns about new risks posed by the unique charters.
The decision means that the FDIC will not accept any new applications or rule on any of the 14 pending applications until Jan. 31, 2007.

The FDIC also said it would not consider or accept new applications to change control of an industrial bank, which means it also will not issue a ruling this year on the controversial bid filed in May by Home Depot Corp. (HD) to acquire an existing bank.

"Hey, Wal-Mart! Home Depot! Have a nice weekend!"
Yours truly,
Sheila Bair.

"We respect the FDIC's decision to consider these matters carefully," Tara Raddohl, a Wal-Mart spokeswoman, said in an e-mailed statement. "The FDIC's action does not change our commitment to move forward with our application. We will continue to work constructively with the FDIC."

A spokeswoman for Home Depot was not immediately available for comment.

I understand that she was in a conference room stomping a puppy with 6" stiletto heels and didn't want to be disturbed.

As expected, opponents of ILCs were quick to throw rose petals in the path of the FDIC.

  "It is critical that the agency step back and take a broad look," the American Bankers Association said.

"We commend the FDIC for recognizing that these are not routine applications," said the Independent Community Bankers of America.

[...]

Earlier this month, Reps. Barney Frank, D-Mass., and Paul Gillmor, R-Ohio, introduced a bill that would prohibit companies such as Wal-Mart and Home Depot from operating ILCs. They also welcomed the FDIC's Friday announcement.

"This gives Congress some needed time to hold additional hearings and to review the recommendations of the Government Accountability Office," Gillmor said in a press statement. "I hope the Board continues to evaluate whether they have the tools necessary to regulate the parents of industrial banks."

Barney Frank would have commented, but he was otherwise occupied.

I'm stunned that the National Association of Realtors wasn't gloating to kingdom come.They've been all over this issue like flies on...well, there are so many possibilities that we simply can't choose the perfect metaphor. We're sure that they'll be heard from, soon and very loudly. With the Beast of Bentonville temporarily chained to a fence post, they can turn their fire hose of hate on their true bete noire: The OCC [makes the sign of the cross and rips off three quick "Hail Maries"].

And you thought that you could just sneak out of the office and start poppin' a Friday afternoon "frosty" at the corner saloon without hearing some hot banking news, did ya'? Guess again.

Six more months of rumors, lobbying and politicking. It simply doesn't get any better than this.