Iowa Banking Law Blog

Wal-Mart Opens Bank in Mexico

After being rebuffed in its attempts to establish an industrial loan company, Wal-Mart is finding other ways to get its foot in the door of the financial services industry.  Wal-Mart is targeting the large unbanked and underbanked population.  First it entered the prepaid card market.  Now Wal-mart has opened Banco Wal-Mart in Mexico, with plans to open 80 more.  With only 24% of the households in the country having bank accounts, Wal-Mart is hoping to reach out to the unbanked and underbanked while taking advantage of the $23 billion dollar market for money sent to Mexico by Mexican immigrants in the U.S. every year. 

The banking industry slammed the front door in Wal-Mart's face.  Wal-Mart is now attempting to crawl in the window that was left open a crack. 

Big Banks Develop "The Carbon Principles"

Citi, JPMorgan, and Morgan Stanley have formed The Carbon Principles in anticipation of future greenhouse gas regulations, including an emissions cap.  The hope is that the Principles will be adopted by other financial institutions and encourage investment  and funding of renewable energy projects.  The Principles do not forbid the financing of coal projects, but impose greater hurdles.  For more information see The Environmental Leader.  For Bank of America's approach see the Wall Street Journal Blog.

Federal Reserve Pronouncement on Confidentiality Agreement Provisions

In a recent Supervisory Letter, the Federal Reserve Board clarified its expectations concerning confidentiality agreements between a banking organization and its counterparties and other third parties.  The Fed stated that applicable regulations and policies prohibit provisions in confidentiality agreements that would in any way restrict a banking organization from providing Fed supervisory staff with information, require or permit, without prior Fed approval, disclosure to a counterparty or third party that information will be or was provided to the Fed or that would require or permit, without prior Fed approval, a banking organization to inform a counterparty or third party of a current or upcoming Fed examination or other nonpulic supervisory initiative or action.

In light of the Fed's position, consideration should be given to including in confidentiality agreements provisions that expressly allow a banking organization to provide supervisory staff access to the agreement and related information provided by a counterparty or third party and expressly relieve the banking organization of any obligation to inform the other party when the banking organization is asked to or has furnished such information to supervisory staff.

A copy of the Fed's letter is available at http://www.federalreserve.gov/boarddocs/srletters/2007/SR0179.htm.