Hey, buddy, can you help me out with a word here?

I'm no good at crossword puzzles, and I need a 12-letter word. Starts with a "d," third letter's an "s".

What's that? Disingenuous? D-I-S . yeah, that'll work just fine.

When Wal-Mart (NYSE:WMT) says it wants to open a Utah-based industrial loan corporation (ILC) "to sponsor credit-card, debit-card, and electronic-check transactions, nothing more," it's not lying -- it's being "disingenuous."

And for the record, when Wal-Mart's foes, from the big, bad American Bankers Association (ABA) down to the First National Community Bank of Palookaville, Idaho, say the reason they don't want Wal-Mart to get its ILC license is because they're concerned about the consumer's well-being -- well, they're being "disingenuous," too.

Card-showing time
I know it violates the canons of Washington lobbying to say this. But it's high time someone came out and admitted what we all know is true. And if neither Wal-Mart nor its opponents will do it, I'll just have to do it for them.

Let's address the petitioner first.

Wal-Mart says it wants a banking license so that it can keep all fees that it pays other banks to process its customers' credit and debit card payments "in-house." That's true, as far as it goes, and there's plenty of money to be saved there. But when the retail behemoth goes on to say "and that's all we plan to do," the statement rings as hollow as Hillary Clinton hemming and hawing over whether she will run for president.

The key, you see, is for Wal-Mart to get the banking license now. Once it has it, the company will be free to change the "plan" and go into the retail banking business full-scale.

Prove it
No problem. Wal-Mart is the consummate capitalist enterprise. And the first rule of capitalism, as in bank robbery, is to go "where the money is."

It doesn't matter to Wal-Mart if that "where" lies in a novel sphere of business. Wal-Mart loves money like bears love honey. Why, not so long ago, Wal-Mart's love of lucre tempted it into one of the silliest business ventures imaginable: renting DVDs by mail. That's right. Before getting soundly drubbed by Blockbuster (NYSE:BBI) and Netflix (NASDAQ:NFLX), Wal-Mart got into a business that actually encouraged people to stay away from its stores -- to get their movies without ever setting foot in a Wal-Mart.

How much better it would be for Wal-Mart to enter the retail banking world. The firm already sees the benefits of hosting other peoples' branches in its stores. MoneyGram (NYSE:MGI) and SunTrust (NYSE:STI) customers come into the store, get cash put into their hands, and are automatically surrounded by things to spend it on.

But I seriously doubt Wal-Mart will be content to stop there, once it has its ILC license in hand. Current law would permit Wal-Mart to expand its banking business into the retail sphere in at least 18 states. And seeing as the company has already tried to buy a savings bank (in 1999), and been turned down by regulators, I think it's pretty clear that the company's "plans" will change as soon as that becomes legally possible. There are plenty of profits to be made in banking -- else Wal-Mart's would-be banking competitors wouldn't be fighting so hard to keep the company out of the banking biz.

And speaking of the competition
Since when have bankers become such great advocates of the consumer? The ABA, and the banks it represents, are the people responsible for ATM fees, for credit cards with "minimum payments" aimed at maximizing the time it takes people to pay off their 18%-per-annum-interest loans, for overdraft fees, balance transfer fees, check-writing fees -- in short, more nickel-and-diming fees than you can shake an abacus at.

So what are their arguments against giving Wal-Mart an ILC license?

  • The company is so big that if its "bank" fails, taxpayers could be stuck with an enormous bill when the Federal Deposit Insurance Corp. has to bail it out. Kind of like with the savings and loan crisis, eh?
  • Wal-Mart might pay high interest rates on deposits, and charge lower and fewer fees and interest rates, and this would put pricier banking competitors out of business. True, but while that might not be good news for bankers, it sounds like a pretty good deal for consumers.
  • But Wal-Mart could then turn around and jack up its rates once the competition is gone. Also true. But on the other hand, Wal-Mart has a 44-year track record of cutting prices for consumers, driving competitors out of business . and not then turning around and jacking up its prices. While "past performance is no guarantee of future results," 44 years would be an awful lot of time for Wal-Mart to keep secret its real plan to price-gouge the consumer.

Make up your mind, already
The funniest thing about the ABA's arguments against Wal-Mart is that they contradict the very arguments the ABA is making in its simultaneous duel with the National Association of Realtors (NAR). Without getting too off track (details are here), the bankers want to compete with the realtors for lucrative sales commissions from selling houses. Testifying before Congress, ABA Chairman and Wachovia (NYSE:WB) Executive Vice President Betsy Duke argued that competition is good for consumers, because it will drive down commission rates.

Of course, if the ABA's member banks get to enter the real estate market, the competition would also likely put some realtors out of business. And who's to say the banks won't then raise their own rates once the competition is out of the way?

Comparing Wal-Mart's track record with that of the bankers, I have to say I'm more inclined to trust the former than the latter.

Netflix is a Motley Fool Stock Advisor selection. Take the newsletter dedicated to the best of David and Tom Gardner's picks for a 30-day free spin.

Fool contributor Rich Smith does not own any of the companies named above. The Motley Fool has a disclosure policy.