Should a Wal-Mart Bank Be Allowed to Exist?

Wal-Mart wants to be a bank. They say they only want the go-ahead to create a bank so that they can process credit card transactions themselves instead of paying millions of dollars to other banks to have them run the transactions.

On its face, this is reasonable. After all, Target, Harley-Davidson, BMW, Nordstrom and others have their own banks, so why shouldn't Wal-Mart?

On the other hand, some feel that Wal-Mart using its banking charter for benign purposes is about as likely as Iran using enriched uranium to spread peace.

I'm a little torn here. I'm not anti-business, and I don't necessarily think Wal-Mart getting a bank charter is a sign of the apocalypse (those Iranians getting nukes could be, though). But there does come a time when a successful business has to be reigned in before it starts to systematically wipe out the rest of the economy.

What I'm trying to say is if Wal-Mart gets their charter, don't be surprised if Microsoft suddenly wants one. Or Google, for that matter.

On the other hand, big retailers often sell off their credit card businesses when they realize that their strength is as a retailer, not as a finance company. This same thing could easily happen to Wal-Mart (although if they really just want to process their own credit card transactions, this is all just talk).

I'm not really a fan of Wal-Mart, but I say let 'em bank. However, I would also encourage Citigroup, Bank of America and other banking behemoths to begin production of cheap clothing in China, just to hedge their bets.