Now Home Depot Wants To Be A Bank
After a leaked email suggesting Walmart was planning a full-scale retail banking enterprise (rather than a credit card processing division and they'd previously indicated) became public, the retailer pulled its plans to open a bank. Home Depot, on the other hand, is standing firm. From the Birmingham Business Journal:
Atlanta-based The Home Depot Inc. (NYSE: HD) also has applied to run its own bank...The bank would allow Home Depot to enable contractors to offer home improvement loans to their own remodeling customers.This gives us a bad feeling that we can not easily describe. Its the same feeling we get when he hear about cousins who marry. —MEGHANN MARCOOn Friday, Home Depot said it remains committed to its plans to buy EnerBank.
"Any decision by Wal-Mart concerning its application for a new ILC in no way affects Home Depot's plans concerning EnerBank," Home Depot said in a statement. "The company's application for a change in control is on file with the FDIC. Meanwhile, The Home Depot is hopeful Congress will act so the FDIC can move forward with its review based on the merits of each individual application."
Wal-Mart pulls application for bank, Home Depot stands firm [Birmingham Business Journal]
(Photo: Paytonc)
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Comments:
I just think they should get back in the Home Improvement saddle before they try to rope another horse.
/shrug. Lots of large companies are doing the same thing including most insurance companies. Why pay someone else to hold your money. I don't see this as that big of a deal. It's just the way of business nowadays.
what's the big deal behind a company owning a bank so that it can offer loans to consumers to buy products at their stores? well, the major issue that banking regulators have with this is the conflict of interest, relative inexperience in consumer lending, & the propensity of a company to bend lending rules in order to boost income, which results in a solvency issue.
i sent a link on a previous post regarding high delinquency rates with target visa (presumably from their more lenient lending policies) & the inherent problems that this could cause the entire target company in the future:
http://www.businessweek.com/magazine/content/06_29/b399304...
i understand that other merchants have done this in the past, but regulators are working on closing the loopholes that allow this. it is simply not financially sound for merchants to finance their consumers' debt to their store.
if home depot wants to offer home improvement loans at a more competitive rate, they should shop around with their portfolio, not attempt to bypass an industry that they don't understand.
@Troy F.:
Andrew Dan-Jumbo is on top of it.
Honestly, I can't see myself going to Home Depot for a loan. I mean, it's a home improvement store. I have to agree with mac-phisto on why that's a bad idea.
Oh, ha ha ha ha... I can just see how this works. Home Depot will open banks and put no tellers at all out on the floor! It will be so hard to withdraw money that Home Depot will be able to float enormous profits. And as evidenced by the success of HSBC, WaMum, and BoA, people will swarm the place in droves, eager to open an account and get crappy service.
Cosumerist should be a Bank. Everybody is doing it.
I remember 10 years ago within the bank I worked for we were told that within 5 years Microsoft would be our biggest competition in banking...
Never happened.
I want a Google Bank!
How about these companies try to fix the problems with their current operations instead of adding stuff to that.
I'm neutral. Can someone explain the bad feeling part a bit more? (Point of information, Home Depot does home improvement loans right now, though a partner, at an unhealthy 14% or so interest.)