Wal-Mart is no Bank of America
Everyone hates the Big 4, but new banking efforts by retailers will only act as R&D for the financial giants.
The U.S. banking quadropoly of Bank of America (BAC), Citigroup (C), Wells Fargo (WFC) and JPMorgan Chase (JPM) has worn out its welcome with the public, but don't look for Amazon (AMZN), Google (GOOG) or even Wal-Mart (WMT) to offer a meaningful alternative.
Wal-Mart has long aspired to enter the banking business. While pre-crisis efforts by the retailer were shot down, Wal-Mart is back at it through a partnership with American Express (AXP) unveiled Monday called Bluebird.
While Rochdale Securities analyst Dick Bove argued in a note Monday that Bluebird does pose a threat to the established banks, it's hard to see Wal-Mart and Amex really offering a viable alternative to consumers.
While the partnership clearly wants to pitch itself as a white knight, arguing in a statement that it is "expensive to be poor," and that Bluebird "rights many of the wrongs that plague the market today," who do they think they are kidding?
If Occupy Wall Street couldn't get people who hate big banks to switch to smaller ones -- even sympathetic people like me -- why should Wal-Mart or American Express be any different? The power of inertia is far too great, and it is aided by the fact that all the automatic deposit and billpay customers set up through their banks are extremely costly and time consuming to undo.
Amazon and Google, meanwhile, don't look to be trying to compete with banks at this point, even though they are entering the lending business to spur sales of existing products.
But not all private label credit card businesses have failed. Alliance Data Systems (ADS) has had success with its private label business, and General Electric (GE), which initially wanted to sell the business, now finds it to be one of the most profitable GE has.
What's more, Google and Amazon are offering credit to small businesses, not consumers. That ought to allow them to be more selective, since the supply of credit to small business is especially tight. Nonetheless, these efforts are modest in scope and so don't pose a threat to the big banks.
In fact, the same could be said of Wal-Mart. Getting around banking regulation proved so easy in the run-up to the 2008 crisis, many assume the next crisis will come from a similar exploitation of loopholes in the rules. Building a bank in secret, however, isn't likely to prove so easy for several years at the very least. That is especially the case if you are a giant like Amazon, Google or Wal-Mart. Regulators have broader powers that they did before the crisis, and they are likely to intervene before any new shadow banks get too big.
What Amazon, Google and Wal-Mart are more likely to accomplish is to give more nimble banking players like Wells Fargo some smart ideas they will then be able to properly exploit.
More from TheStreet.com
Romney ' WHERE'S THE BEEF' to your 5 point economic plan, all fake.
Romney the numbers don't add up. 8 Trillion means BIG tax increases for middle income.
Romney "47% of the people, I'm not interested in them their victims."
Romney Bain mgt style was corp raider not empathic at all to people.
Romney State run healthcare isn't balanced and fair it's a circus.
Romney Mass. came in 47 of 50 states for job creation, when you were gov'r
Romney "let GM go bankrupt", isn't a plan it's a Bain corp raider tactic
Romney immigrants "let them self deport" ...
Romney "women have there place"....
Romney is King.....of 'FLIP FLOPPERS' is the only reality here.....
Walmart an the stock mkt will nose dive after Romney is elected.
His job one is to build a 'WAR MACHINE'- 2 Trillion $$$ more in your taxes above present military baseline. The present military leaders don't want it but he wants to invade Syria, Iran and back off the Russians as he says ie restart the cold war(?). He is a War Hawk like G.W. He will send your kids to war to died but not his. He like G.W. made sure neither he nor his kids went to war. Ours (the poor and middle income families ) will supply the kids again and again for his ego.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.