Restrictive state banking laws are not preventing Walmart (WMT) from extending its reach as a financial services presence which dwarfs many banks. The world’s largest retailer will extend its “Money Centers”  this year to 1,500 stores, up from 1,000.

Walmart’s financial push has focused on the relatively poor who have no bank accounts or only have tangential relationships with other financial institutions.

“We think banks are not as interested in this customer and have a lot of other things on their plates,” said Jane Thompson, president of Wal-Mart Financial Services.  And, the stores do provide pre-paid debit cards and bill paying services that banks might find are not profitable.

In a report on the new “Money Centers”, The Wall Street Journal points out that Walmart applications to become a bank have been rejected in every state where it has applied. The reason may be that local banks are worried that a competitor as large as Walmart might hurt their businesses much as it has that of local retailers.

But, the government actions to keep Walmart out of the bank business are short-sighted. One of the major problems preventing the economic recovery is that consumers do not have access to capital.  Walmart provides many of the services that allow people to take the money that they earn and get it into the retail market and help pay their bills.

With charters, Walmart would be able to expand its financial service to its 4,000 plus stores in the US. Since the retailer caters to people who many banks do not want to serve and to whom they are likely to deny credit, Walmart supports a level of liquidity that almost certainly bolsters the economy.

The retailer may be as important to the national recovery among some people as any bank is.

Dougals A. McIntyre

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