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Fed Chairman Throws ColdWater on Creating Wal-Mart Bank

March 21, 2006

Washington, D.C. - Federal Reserve Chairman Ben S. Bernanke on Tuesday issued the following written response to a question from Congressman Brad Sherman about a loophole that lets commercial firms buy industrial banks.

œ¦The Board has encouraged Congress to review the exemption in current law that allows a commercial bank to acquire an FDIC-insured industrial bank (ILC) chartered in certain states without regard to the limits Congress has established to maintain the separation of banking and commerce, he said.

œContinued exploitation of the ILC exception threatens to remove this important policy decision from the hands of Congress, Bernanke added.

Sherman said, œChairman Bernankes statement clearly urges Congress to prevent regulators from mixing banking and commerce. He clearly urges us to close the ILC loophole which Wal-Mart is trying to exploit to get into the banking business.

Sherman is a member of the House Financial Services Committee. He asked Bernanke about Wal-Mart at a Feb. 15 hearing.