Like an arsonist warning of the dangers of playing with fire, the expiration of certain provisions of the so-called Dodd-Frank finance reform bill has the nation's biggest banks warning that retailers like Wal-Mart (WMT 0.46%) may use the opportunity to offer banking services unless Congress acts now. Since they were the ones that nearly burnt down the nation's financial house, perhaps they know from whence they speak.

As part of the financial system's overhaul, a three-year moratorium was imposed on non-financial businesses offering credit, savings, and CDs to consumers. Just before Dodd-Frank was enacted, retailers like Home Depot that had applied for a bank charter had their applications put on hold. Even though over the years we've had numerous non-financial companies like General Electric, Pitney-Bowes, General Motors --  in fact, much of the auto industry -- operate as banks through the creation of industrial loan corporations, or ILCs, without any outcry from the industry, it's only the possibility of Wal-Mart entering the fray that causes them to quake.

The retail giant has been down this road before, having applied for -- then withdrawn -- the chance to create its own ILC back in 2007. While the usual shibboleths against the retailer are trotted out time and again by banks and activists who have a deep-rooted animus against the low-cost retailer and say it could undermine the banking system, the examples of the retailers already providing such services show they actually provide stability and safety for the consumer.

According to the Milken Institute, ILCs have capital-to-asset ratios of 16.7%, much higher than the banking industry's 11.3%, while also having the lowest percentage of troubled assets -- 2.5% -- than do the banks. At the same time, they're more profitable, with a higher return on assets. In fact, commercially owned ILCs are the most profitable banks in the country.

Shoppers can get mortgages through Costco, home improvement loans through Home Depot and even insurance policies from MetLife through 200 Wal-Mart stores across Georgia and South Carolina. 

With one in five households being underbanked according to the FDIC, banking where you shop for groceries would offer consumers convenience that traditional banks cannot. But perhaps Wal-Mart might not even want to be a bank here in the U.S. anymore.

The retail king offers already offers a host of "shadow banking" services like insurance, prepaid debit cards through American Express, and check cashing and wire transfer services. While Wal-Mart does operate as a bank in Canada and Mexico (without any financial ruin being brought about), the retailer has essentially found a way to meet the financial needs of its customers without all the attendant regulation that comes from being a bank.

The expiration of the Dodd-Frank moratorium may have the banksters grabbing their lighter fluid to kindle a fire under Congress to make a move, but sales of groceries and home goods as ancillary operations to the provision of banking services seem like a much better alternative than banks engaging in derivatives, subprime mortgages, and other shady practices that scorched the country's psyche.