Wal-Mart Opens Banks in Mexico

From the International Herald Tribune, an article about the Finance Ministry in Mexcio giving final approval for Wal-Mart to open banks in Mexico in 2007.

Public opposition has all but killed a Wal-Mart plan to open its own bank in the United States. But in Mexico, the retailer's push for a bank is sailing through.

One possible reason for the different receptions in the United States and Mexico is that, by most estimates, as many as 80 percent of Mexicans do not have bank accounts. Working-class Mexicans have been largely shut out of traditional banks by high fees, minimum balance requirements and intimidating paperwork. Community banks barely exist.

Because Wal-Mart plans to offer bank accounts to working-class Mexicans, local groups apparently had difficulty trying to stir up public outrage.

In the United States, Wal-Mart's application for an industrial bank is frozen. The company said that it wanted the bank to process credit card transactions. But community banks in the United States and even larger banks joined the usual Wal-Mart foes like unions, labor activists, small merchants and community groups to oppose the bank.

Too bad for the USA. In a recent study, Professor Hausman from MIT estimated that Wal-Mart had shaved 0.75 percentage point off annual inflation in food prices in the four years ending with 2001. "These guys (Wal-Mart) have done much more than any antipoverty program," he says. We're probably all a little poorer now with Wal-Mart banks in the US.