While browsing my Washington Post web news this morning, I read that Walmart is making plans to enter the lending market. Students in an earlier Money and Banking course will remember our debate based on Walmart's efforts to compete in the banking industry. At that time, the consensus was that it was unwise to allow the king of retail discounting to enter such a sophisticated and hallowed realm.
Well, now we flash forward to 2010. Banks have almost free money from the Federal Reserve and based on recent experience and perhaps major risk aversion, they are being mighty stingy with their loans. Does this change the American perspective enough to change our position? If Walmart is willing to lend; businesses are in need of loans; and the macroeconomy would benefit, do we want Walmart to fill this gap?
