The American Banker reported (log in required) that Home Depot announced that it would end its bid to purchase a Utah industrial loan company (ILC).  This comes just less than one year after Wal-Mart withdrew its bid to buy an ILC.  These bids by companies such as Wal-Mart and Home Depot have been vehemently opposed by an aggressive banking lobby, which does not welcome the competition from commercial firms.  For now at least, it seems that this lobby has won.

Congress has been trying to clarify the rules governing who can own an ILC charter, but no agreement has been reached.  In the meantime, the FDIC has imposed a moratorium (twice) on evaluating ILC bids from commercial firms.  The moratorium is scheduled to end next Thursday.  If the Home Depot application was still pending, there would be some pressure on the FDIC to make decisions on the issue of who can own an ILC.  Although there are still some bids pending, such as one from the Blackstone Group, Home Depot’s withdrawal removes much of the pressure.

Nonetheless, the banking industry will still continue to press for federal legislation that restricts commercial firms from owning FDIC-insured institutions.   Chris Dodd, Chairman of the Senate Banking Committee, has promised to talk with ILC supporters and get legislation on this issue moving in 2008.

While Home Depot reports that its own internal business strategy explains its recent decision to withdraw, it's hard to believe that the unwelcoming regulatory and policy environment that its bid encountered was not a factor.  If policymakers were serious about helping to create economic opportunities for lower- and middle-class Americans, some feel that more should be done to support efforts like Home Depot’s – which was planning to use its ILC to offer credit to consumers and businesses, particularly those construction companies owned by or employing immigrants and foreign-born nationals.