Research paper

Abstract

Nowadays, Wal-Mart is a hot issue not only because of protesting from the small retailers in the community but also because of new project to expand their field to banking service. As we all know, Wal-Mart is the well-known greatest company in the world, so their impact on the market, which they touch also, cannot help being greater than any others. This paper argues that before we allow Wal-Mart to move into banking service, we should consider several things and several things should be handled.


At Wal-Mart, the greatest company in the world, we can find and purchase whatever we want from our groceries to the electrics and medicine. According to the NY Times (2005), Wal-Mart registers nearly $20,000 profit every minute of every day. Last fiscal year, Wal-Mart recorded profits of $10.3 billion. For comparison, Target’s profit per minute is $6,084 and Costco’s profit per minute is $1,711. So the author called Wal-Mart “a money-making machine”. And also, its market power and the impact on the small retailer shop are out of our imagination. This big company recently starts to move into banking service under their name value.

D. Anthony Plath, a finance professor at the University Of North Carolina Of Charlotte said that “It’s not a question of if Wal-Mart is going to be a bank; it’s a question of when” (Zellner, 2005). It implies that it has almost arrived. Wal-Mart already submitted application for admitting the opening of the banking service. The Federal Deposit Insurance Corp. is reviewing Wal-Mart’s application for a bank charter and may rule as early as February. But some members of Congress are urging the FDIC to delay action until President Bush fills a vacancy on the five-member board. And others have insisted on the FDIC holding public hearings before the ruling. Even though there are some problems for their projects, they continue to look for agreement for branches at more of their stores. It shows how firm Wal-Mart’s decision is.

However, it is true that there are many concerns and criticisms about this movement of Wal-Mart.
Even though they are blamed by many citizens and communities, we need to know why they want to open their own bank. There are several reasons. One is that Wal-Mart believes that running banking services will help them save millions of dollars a year because if they have basic banking service, they don’t need to pay fees when they transact with the banks any more. Even though each fee is a very little tiny in each transaction, it becomes billions of dollars totally in a year. Another reason is that according to Gary Stibel of New England Consulting Group in Western Connecticut (Zellner, 2005, p.2), “Wal-Mart is giving people in lower-income brackets opportunities in financial services they never had before”. So some people expect that this opening will be a part of a welfare system that even government cannot do.

In this point, we should notice why there are fierce disagreements against Wal-Mart’s new project and what problem can be caused. First, this project is totally opposed to the current laws. Actually this law is the most difficult obstacle for Wal-Mart to go through. This prohibition is designed to prevent a big company such as Wal-Mart from denying credit to competitors or shifting losses from its retail business to an insured bank. The reason this law was made is that all people agree that having a bank of a big company is risky and dangerous for the market. So breaking this rule for a specific company doesn’t make sense. Second, it definitely threatens the community bank. The basic common sense that we already know about Wal-Mart’s policy is “lowest price” compared to their competitors. Like their catchphrase “Always low prices”, they always offer good deal for the consumers. So the low-income houses who cannot afford to buy their food or stuffs in upscale store have been able to be blessed with the good quality’s products. Nobody guarantees that this strategy will not apply to banking service. This makes the community banks feel scared of this project.

Usually, the regular capital for operating the bank is from the fees from consumers. If Wal-Mart suggests unprecedented fees for the consumers, the consumers will try to transact with Wal-Mart banks and it will result that the community banks, which have no competitive power, are going to go bankrupt. Finally, I would like to add more related to the second reason. The supporters of Wal-Mart National bank emphasize that Wal-Mart’s banking service will handle only “basic” banking service. But the past way of Wal-Mart’s expanding in their fields makes people doubt it. Fifteen years ago, Wal-Mart said it had no designs on the grocery business and 20 years ago, they said they had no designs on the hardware business, but now they are controlling both business (Pasha, 2006).From this evidence, we can predict that Wal-Mart will expand in the new area in the finance market.

Obviously, there is light and darkness in this hot issue. If Wal-Mart’s banking service is coming close to us, we need to take action before approving it. Here are three things that we should consider carefully and that should be handled.

First, Wal-Mart needs to go through the current prohibition and try to learn the lesson from Sears’ example. Since 1999, there have been many trials of Wal-Mart to begin opening banking actually. But by setting the Gramm-Leach- Bliley Act in May 4, 1999, Wal-Mart missed the deadline and in 2001 and 2002, the Office of Thrift Supervision and California Legislature had rejected them (Weier, 2005). Then, let’s think about the reasons of this prohibition seriously. One is that when large retailers enter the banking business, we must consider whether the public’s personal information is safe. Retailers have access to private medical information through their own pharmacies or corporate owned insurance companies and they have access to personal financial information from retailer-owned banks. Thus there is no limitation on a retailer’s ability to use confidential medical and financial information to market products to the consumer or to sell the confidential information to other commercial firms. Another reason is that if Wal-Mart wants to provide retail banking services to its customers without breaking the banking restriction, it may partner with an established bank. It is clear that there will be no social benefit (FDIC Letter, 2005). The law in the United States for 60 years has aimed at prohibiting a mixing of banking and commerce because “a mixture creates too much potential for conflicts of interest-lending to the commercial side. There is a potential for not imposing the same strict credit standards on loans to commercial affiliates” according to Anita Weier (2005 p. 2). As we can see above, it shows very clear qualities for a sound financial market. I do think that before shaking this law by Wal-Mart’s ruthless lobby, we should speculate on and ransack these potential problems keenly and sharply in advance.

Second, I would like to say that we need to see the strongest point that Wal-Mart suggest that they will give the benefits for low-income housing and for immigrants under Wal-Mart’s promise and cause the positive economic effects. This point makes me glad about the half of the welfare system, which even the government hardly ever tried for them. Before the blaming Wal-Mart, we need clever wisdom to take this point for the hundreds and thousands of people who never have their own banking account or benefits from the bank services like credit cards and mortgage loans. Some analysts estimate that more than one-fifth of Wal-Mart’s customers have no bank accounts, “which would be about twice the national rate”, according to the Federal Reserve (Weston, 2006). Besides this point, Wal-Mart can handle the current markets’ price bubble for the consumers. Imagine that if the world’s biggest retailer interferes with the market, who will get more profits and get benefits from it? Perhaps, we can make mortgage lender, who impose junk fees, banks that bleed small accounts to death, auto lenders who add discriminatory surcharge on loans to black and Hispanic buyers, and the check cashers and payday lenders that levy usurious charges on their customers and so on, to stop doing their arrogance to the public (Weston, 2005). And also the Mrs. Weston even insisted that Wal-Mart National bank will have “credit for helping to keep inflation low”(2006, par.5) because she believed that current banking services make themselves fat by escalating rates and fees. So Wal-Mart’s competitive lower price offer will be helpful to reduce the price bubble of nowadays’. I do believe that these good points that we can expect in the future cannot be taken lightly. This impact is possible because the subject of this project is “Wal-Mart”. So, if we require that it can promise and guarantee that they will not intend to expand their field to full service banking in front of citizens, it can be counted as the synergy effect to not only community’s welfare but also the Wal-Mart business itself.

Finally, even though the lower price that Wal-Mart will offer will bring the benefits to consumers’ life right now, in the long market views, it is very risky and dangerous. Before starting this argument in detail, we need to think about the government’s role in market balance in free capitalism. There are several reasons the government should take action for the market. Among them, one is that the encouraging competition among the companies is considered an important role. We all know the negative point of monopoly. It causes the market to move irregularly, and also consumers should be pressured by the high price that the company ordered. It also can be related to why the small retailer shops like groceries and so on and people in the community are afraid of Wal-Mart’s continued expansion. This aspect cannot be an exception in the banking service either. Right now, we probably will be very satisfied with the Wal-Mart’s cheap and reasonable banking fees and even the impact on making the community’s banking fees lower. But as time goes by, almost no community banks cannot support their business with small profits compared to the past and many will decide to go bankrupt. After all, it means that the only choice for us is to visit and open an account in Wal-Mart National Bank. Can we dare expect Wal-Mart to offer the cheap price for us at that time? Nobody can guarantee it. If they realize that they are the only bank for consumers, they will want to make more profits than they could make while they offered a cheap price for competing. Also we can regard this as a big deal from the Camden Fine’s saying who is the Independent Community Bankers of America president and chief executive. He said “They may be able to bring prices down until they monopolize an area, but they have such a concentration and there is no other business to counterbalance Wal-Mart, they will be able to price however they want” (Pasha, 2006, par. 11) So, we can say that if we can predict this dangerous situation for the majority in the society like this, there must be some counter plans from the government. It can be a kind of policy that sets a limitation that they can reduce the fees possibly from the background statistics of community banks. Even though this kind of policy can be blamed by people who think that under the capitalism, this blocks enterprise’s creativity to start their business, the biggest company’s tyranny should be controlled by certain power for market’s stability and established balance in the long run goal.

In conclusion, nowadays, many people think that the capitalism is the only answer for prosperity, because under the capitalism system, everyone have chances to open their bank. But somebody said that capitalism can be welcomed for the people only who have capital for opening their own business. It means that it causes the gap between the rich and the poor to get bigger and bigger, not only in one country but also all over the world. Even if we know this fact, if we say that it is a natural phenomenon for a capitalist economic system, it is too harsh for people who are the majority and have no capital. So there needs to be action. Similar to this general situation, every Wal-Mart project is the best example of the capitalist society. That’s why many people regard Wal-Mart as the biggest and greatest success in business history. The current opening-banking project also cannot be an exception to this trend. As I mentioned before in the introduction, the National bank of Wal-Mart is just waiting for the permission. It is not just saying from one of the Wal-Mart relaters. It is real in our life. If then, we should calm down and recognize this fact and start to make a defense for a better life to all of them. It is obvious that if we can reach the compromise with Wal-Mart, we can have many benefits for all of us. If we cannot avoid confronting the problem, striking with it willingly can lead to unexpected positive results.


= Bibliography =
FDIC Letter (2005) FDIC Letter of Opposition to Wal-Mart application. Retrieved on February 22, 2006, from http://www.cib.org/ilc_2005/sample_arguments.htm

Shean T. (2005, December 21) First National bank of Wal-Mart This isn’t real. Some Virginia Bankers worry it could be. The Virginia-Pilot Retrieved on February 2, 2006 from Lexis-Nexis

Pasha S. (2005, October 27) Coming soon: A Wal-Mart Bank?. CNNMoney.com. Retrieved on February 20, 2006, from Lexis-Nexis.

Pasha S. (2006, January 4) Wal-Mart bank faces tough opposition. CNNMoney.com. Retrieved on February 15, 2006 from Lexis-Nexis.

Weier A. (2005, July 9). Will Wal-Mart someday own a bank?. The capital Times. Retrieved on February 22, 2006, from http://www.wakeupwalmart.com/news/20050709-tct.html?printable

Weston L. (2005, September 22). National Bank of Wal-Mart?. MSN Money. Retrieved on February 16, 2006, from http://moneycentral.msn.com /content/Banking/Betterbanking/P109171.asp

Zellner W. (2006, January 27) Wal-Mart moves in to Banking and financial Services. Reclaimdemocracy.org. Retrieved on February 13, 2006 from http://reclaimdemocracy.org/walmart/
banking_financial.php

Final Exam 1st draft

Christine Kim
AP2 WW
Final Exam

Wal-Mart is rejected to go inside of Queens.
Wal-Mart is in the hot issue nowadays not only their ethical problem but also their ruthless expansion to everywhere in the USA. Mr. Locke called Wal-Mart as “the most impressive success stories in the history of business” (2004, par. 4) and even he thinks that we need to feel thankful about this company’s giving benefits to us (2004). However, if we consider the facing problem of Wal-Mart carefully, it is true that we cannot proud them as much as he said. As we all know, Wal-Mart has been failed from the project to have their stores in the big main city like Chicago or New York. So their efforts to go inside of the center of those cities are continuing nowadays. But, unfortunately, one of their plans to set up their new store in Queens shopping complex is rejected by fierce opposition according to Seven Green house (2005). The big reason that this kind of failure is happened frequently will be the opposition from the small business and retailer shop in the city. So the city Council members and several members want to protect their resident’s business from big giant. So, Wal-Mart’s expansion project to big city is too early to perform. But there is another opinion about this issue. According to Mr. Greenhouse, some shoppers in Queens are welcoming Wal-Mart to come their community because they used to go Long island for their cheap shopping. If there is Wal-Mart in their region, they don’t need to go far away any more. As we can see above, the Wal-Mart has very controversial issue to all of us. Which one is more important for us, keeping our community small business and retailers from the big monsters or offering the chance to consumers go shopping with cheap price? Both sides have their own evident reasons to support and oppose the Wal-Mart. But, I do believe that we need to follow the market’s choice since the nowadays’ society have intend to capitalism. Here are the three arguments why I support we should respect Wal-Mart’s plan and capitalism.
First, without Wal-Mart, the low-income housing people are hart to get the good quality’s stuffs. For giving support to this reason, Mr. Locke said, “Wal-Mart is especially popular among low-income shoppers who cannot afford the prices of the more upscale stores. In a free economy, companies that offer the best value for the dollar win and the losers invest their money elsewhere” (2004 par. 2). And also, Wal-Mart’s ‘everyday low price’ policy helps consumers save over $2,000 a year (Hoenig J., 2004). This impact can be comparable to real welfare system of government that it never cannot be done before.
Second, Nobody can deny that Wal-Mart has been paid the big tax to their community where their stores are located. This has been possible that Wal-Mart was successful and has been made great profits from the community. Without tax, the City Council will be hard to operate their system for their residents. We need to notice that Wal-Mart never got all of benefits for themselves. As much as we consume to Wal-Mart, Wal-Mart paid the tax for community. For example, Wal-Mart paid hundreds and thousands of taxes. It estimates “over $61 million in the state of Illinois alone” (Hoenig J., 2004, par.6). The tax is main source for conducting out communities and welfare system in our society. As Wal-Mart gained more profits from the residents, they will probably pay more tax and it definitely will be returned to us as a certain way.
Finally, the Wal-Mart has been offer the job opportunities to residents who even have their jobs before. Of course, there is some opposition because of the bad treatment to employees of Wal-Mart. UFCWIU has been criticized Wal-Mart, since the health insurance that Wal-Mart offers to their employees covers “only 48% of their employees”(2005, par. 10). And also, Wal-Mart spends their money on health insurance less than the average. So According to Wall Street Journal in 2002,Spending of Wal-Mart per employee were only $3,500 even though their average earning per employees in wholesale were estimating to $4,800 (UFCWIU, 2005). Even if there are some ways that Wal-Mart treats their employees harsh, if there were no Wal-Mart in the USA, many people who work for Wal-Mart couldn’t expect that they can get a benefit from the insurance and have a job never and ever. Before judging the company, we need to admit the bright point of view for the first time.
In conclusion, have you ever thought about why most of countries in the world choose capitalism as their own economic system? I think that they have already realized and experienced the advantages of this system. It definitely brings prosperity and wealth to our life. Then we need to respect capitalism’s basic ideas that businessmen can have chances to perform their motivation and creativity. So if there are problems in company, we need to choose to punish the company by not choosing and supporting their stuffs. It means that we cannot prevent company’s plan from the beginning. It would be better if we can reach the compromise with company for our better life.
Reference:

Reference:
Hoenig, J. (2006, February 10). Welcome Wal-Mart. Capitalism Magazine. Retrieved on February 23, 2006 from Capitalism Magazine
Locke, E. A. (2004, February 22). Three Cheers for Wal-Mart. Capitalism Magazine. Retrieved on 2006, February 22 from Capitalism Magazine .
Greenhouse S. (2005, February 24). Developer drops plans for city’s first Wal-Mart. Retrieved on 2006, March 1 from Reclaimdemocracy.org
UFCWIU. (2005). Wal-Mart and Health Care. Retrieved on February 23, 2006 from wakeupwalmart

Practice S/R -By Christine!

Myunghwa Kim
EAP2 WW
01/19/06

Some Cities Resisting Wal-Mart Expansion

In the article, “Some Cities Resisting Wal-Mart Expansion”, from the Common Dreams News Center, the author talks about the problem of the Wal-Mart’s expansion. The author started her article with the example of the Stoughton’s situation. Here, Wal-Mart wants to set up another new bigger Wal-Mart. Even though people like Wal-Mart, they opposed Wal-Mart’s new plan to open more than 200 supercenters in the U, S. According to this article, because people need grocery more often, Wal-Mart decided to open supercenter with grocery and they believe that it will increase their sale more. From the article, the worries about the dominating of the land and disappearing of the small business are the main reason why they opposed Wal-Mart’s new plan fiercely. This problem is not only for Stoughton but also Dallas, Texas. and New Orleans. For solving this issue, Wal-Mart insisted that they want to work with the communities like Amish and Hispanic populations and not to derive more that 25 percent of their revenues from food sales. At the end of this article, she mentioned the multiple stores and going small as a solution of the expansion. However, because people don’t like to go up and it cannot show all of the items they have, the going vertical suggestion follows the risky damage, which make the Wal-Mart’s profit be declined. And owing to insufficient manager, the going small solution is also problematic.

Nowadays, Wal-Mart is a hot issue with several problems. But the most important issue is Wal-Mart’s expansion to the urban area, even though they already have one. I do believe that there should be a policy to stop the expansion of Wal-Mart in order to present three potential problems. Here are three main problems.

First of all, Wal-Mart’s expansion threatens the death of small business. As we all know, Wal-Mart is the biggest company not only in the USA but also in the world. If we leave the Wal-Mart alone, the bigger Wal-Mart is, the more monotonous the other businesses are. For example, globally, with the spreading of Wal-Mart, the culture of the eating, clothing, and living gets similar all over the world. People do not keep the unique and special tradition and custom any more, because they feel more comfortable in the western life style. So, if we travel abroad to out of our country, we can find the same store and impression. We will not be able
to experience the other culture any longer.

Second is the destroying the balance of the price system in the free market. Now, even there is not a Wal-Mart, we can go to other shoppingcenters for getting the stuff that we want to get. But think about the related to first problem. Because of the expansion of the Wal-Mart, what if that Wal-Mart is the only store that we can buy groceries in the world? At that time, Wal-Mart will be the only company, which decide the price of the products. And they will not need to negotiate with the competitor. As a result of this, the customer might have to pay a much higher price than now. Every business should need the competitor for balancing the price system for the customers.

Finally, the last potential problem that I consider is threatening the private property for setting up the new and big supercenter in the urban area. There was a case in which the Supreme Court allowed the local government to use the private property for building a pharmaceutical factory. It’s definitely not for public use but for economic use. Nobody assured that it will not happen again in the future. To open the big Wal-Mart in the urban area will require a large and spacious place. It makes Wal-Mart use the eminent domain again from the last case. So I agree that the government can make the ordinance to block the expansion of the Wal-Mart.

In conclusion, of course, it’s hard to deny the shopping satisfaction from Wal-Mart’s price offer. However, if it needs, sometimes the government should interfere with the unnecessary and scary development of a certain company’s growth for the citizen’s welfare. For balance of the market, blocking the monopoly, and the respecting the several cultures in the world, the expansion of the Wal-Mart must be restricted by the policy and the law.

Reference:
Kaiser, Emily (2003, July 12). Some cities resisting Wal-Mart expansion Reuters. Common Dreams News Center. Retrieved on Jan. 17,2006 from http://www.commondreams.org/headlines03/0712-06.htm

Wal-Mart

Synthesis Ex.
Christine Kim
EAP2 WW
Synthesis Exam.

Wal-Mart in the Carbondale-Murphysboro

Nowadays, there is no one who denies that Wal-Mart is the biggest company not only in the US but also in the world. So Mr.Loske regards Wal-Mart as “one of the most impressive success stories in the history of business”. (2004, Par.4) But the bigger the company grows, the more complicated problems that follow. Wal-Mart cannot be the exception this principle. As Wal-Mart grows increasingly, they try to open the supercenter around the US. However, this project requires too many sacrifices of the small businessmen and retailer shops. Because of this fact, there are lots of protests against Wal-Mart’s ruthless expansion from the activists and small businessmen. According to N.Jacobs, in the Carbondale-Murphysboro area, there is also fierce protesting against Wal-Mart’s new supercenter because it threatens the small business and people’s life standards (2005). I do believe that in the capitalism society, no one has a right to block the businessmen’s project. If it is wrong, it should be punished by the market principle. Here are three reasons that I support Wal-Mart.

First, Wal-Mart gives consumers a lower price. With Wal-Mart’s presence, the price bubble has been gone in the market because the other stores also should decrease the price for competing against Wal-Mart. This lower price policy of Wal-Mart benefits to the low-income houses that don’t have enough money to buy the goods from upscale stores (Locke, 2004). In addition, Mr. Hoenig says “estimates suggest the average Wal-Mart can save a family over $2,000 a year compared to shopping at higher priced alternatives”(2004, Par. 6) This impact can be regarded as a great welfare system for the low income houses that cannot be done by government.

Second, Wal-Mart has created a lot of job opportunities in the US. Mr. Hoenig said, “ in 2005, Wal-Mart created 125,000 U.S jobs, and is continuously adding thousands each month”(2004). This is also fabulous benefit to those who couldn’t find the job. UFCWIU criticizes Wal-Mart, since the health insurance that Wal-Mart offers to their employees covers “only 48% of their employees”(2005). Even though there are some ways that Wal-Mart treats their employees badly, if there were no Wal-Mart in the US, they would not be able to have even those health benefits. And also, we need to understand that the company is the organization for pursuing the profits, not for volunteer activities. With their having a job in Wal-Mart, it is true that some employees who never expected the government benefit can be covered by the government welfare system.

Finally, we need to notice Wal-Mart’s economic role in the US and society. As Wal-Mart offers the lower price to the people, it stimulates the consumption in the market. For the market’s circulating smoothly, consumption is very important. If the consumers stop buying products, it will cause the domino effect from the company to the whole market. And also Wal-Mart offers communities higher taxes. In Illinois, it is estimated over $61 million (Hoenig, 2004). The tax is the main source for conducting our communities and welfare system in our society, As Wal-Mart gained more profits from the communities in the Carbondale-Murphysboro, they will probably pay more tax and it definitely will be returned to us.

In conclusion, we know the reason the people choose capitalism, as their own economic system is that they have already experienced the advantage of it. It brings prosperity and wealth to our life standards. The basic principle of capitalism is the respecting of the businessmen’s motivations and chances to open their own company. If there are problems ethically, we need to judge them by not buying their products or not going to their store any more. It means that nobody has a right to discourage their plans at the beginning of the business. Before criticizing them, it would better for us choose the way to compromise each other’s benefits under the market system.

Reference:
Hoenig, J. (2006, February 10). Welcome Wal-Mart. Capitalism Magazine. Retrieved on February 23, 2006 from Capitalism Magazine

Jacobs, N. (2004, February 22). Local opposition to future Wal-Mart supercenter in Murphysboro. Retrieved on February 23, 2006 from Daily Egyptian

Locke, E. A. (2004, February 22). Three Cheers for Wal-Mart. Capitalism Magazine. Retrieved on 2006, February 22 from Capitalism Magazine .

UFCWIU. (2005). Wal-Mart and Health Care. Retrieved on February 23, 2006 from wakeupwalmart

Argumentative Essay-by Christine

Christine Kim
EAP2 WW
02/15/2006

Wal-Mart moves into banking service.

Nowadays, there are a lot of issues about the Wal-Mart. The reason many people pay attention to Wal-Mart’s movement is that not only there are many articles and criticisms about it, but also Wal-Mart is the biggest company in the USA and the world. So Wal-Mart’s movement affects many people’s lives and has become an example for other company’s plans. Among many issues, I started to be interested in Wal-Mart’s movement into the banking services and the effect on our lives, because this is the newest and unparalleled venture among retail companies, and from Wal-Mart’s attempt, many companies will try to offer the banking service in their company also. The problem of this issue is that it threatens the bank community with competitive pressure, like its expansion into groceries, gasoline and medicine. According to Tom Shean (2005), Wal-Mart already submitted an application for admitting the opening of the banking service and is looking for agreements for branches at more of its stores. There are several reasons Wal-Mart wants to open a banking service. One is that Wal-Mart believes that running banking services will help them save millions of dollars a year because if they have basic banking service, they don’t need to pay fees when they transact with the banks any more. Even though each fee is small in each transaction, it became billions of dollars totally in a year. Another reason is that according to Gary Stibel of New England Consulting Group in Western, Connecticut. (Zeller, 2005), “Wal-Mart is giving people in lower-income brackets opportunities in financial services they never had before”. So some people expect that this opening will be a part of a welfare system. But, for getting through this project, Wal-Mart needs to smooth out the bumps not only convincing the activists but also overcoming the prohibition in combining banking and commerce.

Wal-Mart recently has started to expand their field to banking services. But, before they open their own bank, there are three things that we should consider carefully and that should be handled.

First, we should remember that we couldn’t violate the current laws. As we all know, the best reason Wal-Mart has difficulties to open their own bank in the market is the current prohibition under the laws. This prohibition is designed to prevent a big company such as Wal-Mart from denying credit to competitors or shifting losses from its retail business to an insured bank. So this is regarded as a big obstacle to Wal-Mart’s new project. But according to Ronald Ence, vice-president of Independent Community Bankers of America (Zeller, 2005), because Wal-Mart has lobbied the politicians since last year, they can overcome this rule. But, I do believe that the laws cannot be changed for the specific company’s profits. Before they try to revise the laws, the politicians can think about the original philosophy of its laws.

Second, if we should open Wal-Mart’s bank, we should take an action for the community banks around the US. Wal-Mart, the greatest company in the world, has a big strong point. It has a lower price compared with its competitors. In the banking services’ field, it cannot be an exception. Because most of the community banks are dependent on the fees of consumers, it is not exaggeration that gathering fees are the main source to manage their bank. In this situation, if Wal-Mart’s fee offering is the cheapest, I am sure that community banks will lose their consumers and need to lower the fee price for competition. It is obvious that many banks will be out of their business. For preventing this tragedy, there should be a policy like setting the minimum of fee, a penalty to Wal-Mart’s bank, etc.

Finally, we need to make Wal-Mart promise in front of all citizens that they will nor interfere and expand their banking service. And they should give their word that they will handle only “basic” banking service for low-income houses and immigrants. Fifteen years ago, Wal-Mart said it had no designs on the grocery business and 20 years ago, they said they had no designs on the hardware business, but now they are controlling both businesses. (Pasha, 2006) From this evidence, we can predict that Wal-Mart will expand in the same way to its new area in the market. So, before we approve their new market, we need to require to them swear in front of all people.

In conclusion, I know that most critics have a skeptical point of view against Wal-Mart’s banking service opening. But, we need to watch reality closely. According to D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte, “It’s not question of if Wal-Mart is going to be a bank, it’s a question of when” (Zellner, 2006, par. 3). The Wal-Mart’s movement is already beside us. So, instead of blaming Wal-Mart, the thing we should do is to find the better alternative way for all of us.


Reference:
Shaheen Apsha (2006, Jan 4), Wal-Mart bank faces tough opposition. CNNMoney.com. Retrieved on Jan. 23, 2006 from
http://web.lexis-nexis.com/universe/document

Wendy Zellner (2006, Jan 27), Wal-Mart moves into banking and financial services. Business week, Restoring Citizen Authority over Corporations, Retrieved on Feb. 6, 2006 from
http://reclaimdemocracy.org/walmart/banking_financial.php

R/P 1st draft Wal-Mart and banking service.

Christine Kim
EAP2 WW
02/07/2006

The Wal-Mart moves into banking service.
Nowadays, there are a lot of issues about the Wal-Mart. The reason many people pay attention to Wal-Mart’s movement is that not only there are many articles and criticisms about it, but also Wal-Mart is the biggest company in the USA and the world. So Wal-Mart’s movement affects many people’s lives and has become an example for other company’s plans. Among many issues, I started to be interested in the Wal-Mart’ movement into the banking services and the effect on our lives, because this is the newest and unparalleled venture among the retail company and from the Wal-Mart’s attempt, many companies will try to offer the banking service in their company also. The problem of this issue is that it threatens the bank community with the competitive pressure like its the expansion into groceries, gasoline and medicine. According to Tom Shean (2005), Wal-Mart already submitted application for admitting the opening the banking service and is looking for agreements for branches at more of its stores. There are several reasons why Wal-Mart wants to open the banking service. One is that Wal-Mart believes that running banking services helps them save millions of dollars a year because if they have basic banking service, they don’t need to pay fees when they transact with the banks any mare. Even though it is small in each transaction, it became billions of dollars totally in a year. Another reason is that according to Gary Stibel of New England Consulting Group in Western, Conn. (Zeller, 2005), “Wal-Mart is giving people in lower-income brackets opportunities in financial services they never had before”. So some people expect that this opening will be a part of a welfare system. But, for getting through this project, Wal-Mart needs to smooth out the bumps not only convincing the activists but also overcoming the prohibition in combining banking and commerce.

Now I am going to write about the three things that should be done before Wal-Mart’s opening of a banking service. First, we should remember that we couldn’t violate the current rule. The current prohibition is designed to prevent a big company such as Wal-Mart from denying credit to competitors or shifting losses from its retail business to an insured bank. Second, if we should open Wal-Mart’s bank, we should take an action for the community banks around the US, because it’s obvious that Wal-Mart will keep growing their area of the bank service and decreasing the fees and prices like the grocers and gasoline situation. Finally, we need to make Wal-Mart promise in front of all citizens that they will not interfere and expand their banking service. And they should give their word that they will handle only “basic” banking service for low-income houses and immigrants.

I have tried to find as many as I can articles, which are in different point of view for a rich background about Wal-Mart’s banking service. But most people who wrote the articles have a skeptical point of view and have a lot of doubt about the continued growth of Wal-Mart’s power. So I am still trying to find other articles about how this problem will be resolved and what is going on nowadays.


Reference:
Tom Shean. (2005). First national bank of Wal-Mart This isn’t real. Some Virginia bankers worry it could be. Business; Pg. D1 Retrieved on Feb.2,2006 from Lexis-Nexis
Wendy Zellner (2006, Jan 27), Wal-Mart moves into banking and financial services. Business week, Restoring Citizen Authority Over Corporations, Retrieved on Feb. 6, 2006 from

S/P #2 Wal-Mart's banking service and Free-Market service
Christine Kim
EAP2 WW
01/30/06

Wal-Mart’s banking service in the free market.

In this article, “National Bank of Wal-Mart?” from the MSN Money, the author mainly talked about the advantages of Wal-Mart opening a bank. The author, whose name is Liz Pulliam Weston, does believe that Wal-Mart’s bank opening will benefit on many consumers. First of all, Wal-Mart bank will help the market have lower price on the fee and the interest, so it means that it can give a reasonable price to consumers to lend money and pay the fees. Of course, she admits that Wal-Mart will not stop at offering the basic service. However, she emphasizes that Wal-Mart banking service’s consumers are different from the other community banks. It can help the people who were out of the financial rights have the advantages of bank services at a very special price benefit. And, last, she insists that Wal-Mart’s ethic is much more honest than that of the mortgage lenders. So, even though there were risk of the expansion of the Wal-Mart’s full service bank, because the advantages from the banking service is even bigger than now, she asserts that we had better allow Wal-Mart to open the bank service. And also, she reminds us of Wal-Mart’s slogan, ‘Always low prices’, for persuading and understanding the better potential of the consumers.

Here, the world’s markets that we live with now are turning to the free market and it is pointing to Capitalism. I’m talking in the position of the free market and liberal point of the market. So here are three reasons why I support Wal-Mart’s banking service.

First, we can expect that we can remove the price bubble from established banks. As we know, Wal-Mart is famous for offering a lower price to customers. With the appearance of Wal-Mart, nowadays, many companies who served the same products also offer the lower price to tempt the customers. This basic principle can apply to Wal-Mart’s banking service opening. According to the one study, it is not overblown that old banks are operating their banks by the relentless fees and increasing the interest rates of the loans. But, if the Wal-Mart bank is made, they cannot violate to the customers any more for keeping their own business and competing with Wal-Mart’s price offer.

Second, continuing to the first reason, Wal-Mart’s banking service’s opening will give the economy the advantages to calm down inflation. We can imagine that Wal-Mart will bring the innovation of the price average of banking service and the retailing bank cannot increase the interest rate freely. It is possible because the Wal-Mart has the greatest number of consumers in USA. If the interest stay at a reasonable rate, many investors will be willing to invest in companies’ new projects, and also the normal citizen’s saving will be increased under the fair interests.

Finally, we need to notice the different customer that Wal-Mart will handle in the future. The main customers that Wal-Mart will deal with are the low-income people and immigrants. According to the statistic, the income of customers who visit Wal-Mart is below the average income of the nation, this means that there are an estimated 56 million American adults who don’t have their own account. Providing these services for underserved customers “gets right at what we like to be known for” says Thompson, who moved to Wal-Mart in early 2002. I do think that these benefits to the people are the most important fact that we have to notice more than the fact that these services attract customers to the stores.

In conclusion, as we all know, a few companies cannot be the only ones in the market, because it is very dangerous and gives the market unbalanced stabilization as well as the consumers’ bad living standard. But, if the current market has a problem, we need a new motive to fix and run efficiently. I do believe that opening Wal-Mart’s banking services will give a shock to the old banks extract the higher fees and interests from the consumers, and benefit the consumers. Under the premise of Wal-Mart that they will not step on the whole banking service with governments and consumers, the National Bank of Wal-Mart is news worth welcoming.


Reference:

Weston, Liz Pulliam Weston (2006, Sep.22). National bank of Wal-Mart? MSN-Money. Retrieved Jan 24. 2006 from
http://moneycentral.msn.com/centent/Banking/Betterbanking/P109171.asp.htm

Practice Essay exam (free-market system)

Christine Kim
EAP2 WW
Practice of Essay exam
What is the free-market system??

Now, we usually say that we are aiming at the free-market system. So, without open the market, businessmen are not available for beating their competitors. Because of this market trends, not only business but also many countries like China opened their door for accepting it. Then we need to define what the free-market system is. Free-market system is one of the economic system in which the way people spend their money decides which products will be produced and what those products will cost.

In my opinion, I do believe that free-market will bring several advantages to our market. Here are the reasons why I encourage you to welcome the free-market economy system.

First, the free-market will allow the entrepreures to develop a creative way to help the economic resources distribute fairly and equally with satisfaction of all citizens. The Wal-Mart will be the big example in these days. With the Wal-Mart’s opening, it is obvious for people to have benefits for buying the stuffs as a cheap price. This also makes the market’s price bubble be removed. So the people who are below the average income housing can be willing to get and buy the goods and their living standards became better. And also, if the Wal-Mart banking service will be opened, the people who are in the low-income people and immigrants can have their own accounts and rights to borrow money from bank. It is definitely enhancement of the living.

Second, the free-market is very honest. As we all know, the biggest disadvantage of the socialism and communism is that there are no motives for people to work hard. Because even though they didn’t work very hard, they can have benefits under the government’s regulation. So, there are no gap between the honest workers and lazy workers. Because it makes the society become worse and worse, there are no improvement of the society. On the other hand, under the capitalism economy system, the people are opened by the chance to make profits by their sweats. If they are failed from the development, it is also their responsibility. So, we don’t have to block the Wal-Mart to set up their new supercenter. If they manage it very well, they will get good profits but, if they didn’t do that, they will fail. It is up to Wal-Mart and consumers’ decision whether they will go there or not.

Finally, I would like to say that, under the free-market service, all of the business could go forward all together. For keep going their business, they have to move, think, find the new way to make money. If there are no competition and stimulation, business cannot flow toward improvement. So, we cannot deny that Wal-Mart let the market know which way is good for consumers and economy. We need to know that as Wal-Mart has been grown, the whole American economy can grow at the same time.

In conclusion, we cannot dream of Utopia like all of people can live equally and fairly. Please pay attention to the market trend. We should accept the trend and consider which way is the best for all of people. Even though you know the fact and still talk about the vain imagination, you will be a loser forever.

S/P #1 Wal-Mart and banking service

Myunghwa Kim (Christine)
EAP2 WW
01/24/06
Wal-Mart and movement to financial services

In this article, ”Wal-Mart Moves Into Banking and Financial Services”, from ReclaimDemocracy.org, the author talks about the possibility of Wal-Mart’s banking service opening. The author started his article with the fact that Wal-Mart is preparing to expand to the banking service area during the last period. This movement threatens other community banks because they expect that Wal-Mart will not stop at the basic services. And also, in this problem, the question, which is not ‘Will they open the banking service?’ but ‘When they will open it?’ makes them scared. According to this article, Wal-Mart has been making an alliance with financial service providers and making the branches. It shows how close the Wal-Mart banking services are. The reason Wal-Mart wants to open the banking service is that they pay lots of fees when they are not a bank and they want to help the low-income customers and immigrants who don’t have any account. Already, Wal-Mart has several simple financial services, but because Wal-Mart is the nonbank vendor of financial services, they have been charging high fees a lot. And they also expected that they could offer the opportunities to have financial services to low-income people. However, still there are difficulties for starting Wal-Mart’s banking services. It is the prohibition on combining banking and commerce. Owing to this law, the big business companies are prohibited to deny credit to competitors or moving losses from retail business to an insured bank. Even Wal-Mart insists that they do not want to provide whole services and want to focus on the low-income customers and employees; it is hard to believe this because we are experiencing the disappearing of the small business. And from the Wal-Mart’s Web sites “a trusted name in financial services” shows their expansion ambition. At the bottom of the article, the author also doubts the success of Wal-Mart’s financial service’s opening.

As we can see above, Wal-Mart has started to show their brutal teeth to expand their field to the banking services. I do insist that Wal-Mart’s growth should be restricted more for three reasons.

First, this movement will cause the same result in eliminating small business.
As we all know, because of Wal-Mart’s lowest price and one-stop shopping, the small businesses around the Wal-Mart has been taken over. Like this principle, there will be Wal-Mart’s violence of monopolizing the financial services. Of course, in the position of the customers, we can expect that there will be healthy competition, better service, removing the price bubble. But, in the future, it will be reversed by Wal-Mart’s greed. They may be able to offer the lower price compared to other community banks until they can attempt to get as much customers as much as they can. At the end of this fact, it’s easy to expect that there will not be competitors any more for balancing the price system.

Second, Wal-Mart’s serving of financial service will break the counterbalance of the market’s system. Already, Wal-Mart has been offering some service. For example, Customers in the U.S. mainland and in Puerto Rico can buy money order, transfer money abroad, and cash checks at the Wal-Mart prices that are almost half compared to competitors. But also, it serves the financial services according to its Web pages. Following one estimate, the market for services Wal-Mart already offers is worth about $5 billion a year in fees. This makes enough room for the retailer to keep declining process and tighten the price margin for other banking services providers.

Finally, we need to think about the ethics of Wal-Mart before allowing their expansion. These days, Wal-Mart has various problems and issues not only related to system of their business but also the treatment of the employees and developing countries, in which their branch factories are located. According to the Independent Community Bankers of America (ICBA), Wal-Mart said that it had no plan to open the grocery business and 20 years ago, they noticed that they would not expand their field to the hardware business. However, now they are controlling both businesses in the economy. This means that even though Wal-Mart insisted that they wanted to serve only basic financial service for their low-income employees and immigrants, that assertion can be the first step to the same results of the past. We need the wisdom to judge their future from the past records.

In conclusion, nowadays, we are moving toward capitalism from socialism. This means that we respect the individual’s creative development and opportunity to make a profit. So some people think that Wal-Mart’s movement to the financial service can bring a positive influence to the market. However, We should remember that, for the equality of the opportunity for everyone, there should not exist tyranny of specific company and private person. For distributing the same power, chance and economic resources, we cannot deny the necessity of the government involvement.

Reference:
Shaheen Pasha (2006, Jan 4), Wal-Mart bank faces tough opposition. CNNMoney.com. Retrieved on Jan. 23, 2006 from
http://web.lexis-nexis.com/universe/document?_m=1abc2a3e8d73912a5ca9baa9af522616&_docnum=4&wchp=dGLbVzz-zSkVb&md5=ff2033d583475
Shaheen Pasha (2005, Oct 27), Cooming soon: A Wal-Mart Bank? CNNMoney.com Retrieved on Jan. 23,2006 from
http://web.lexis-nezis.com/universe
Wendy Zellner (2006, Jan 27), Wal-Mart moves into banking and financial services. Business week. Restoring Citizen Authority Over Corporations. Retrieved on Jan.19, 2006 from
http://reclaimdemocracy.org/walmart/banking_financial.php.htm