U.S. Senator Intervenes for Walton Family Bank Posted by AVCU on 5:51 PM

The 6/23 online version of the Wall Street Journal reports that Senator Blanche Lincoln, a chief architect of the financial-reform overhaul legislation now before Congress, is pushing for a change that benefits a bank in her home state of Arkansas. Arvest Bank, about $11.3 billion in assets, is mostly owned by the Walton family. The same Walton family that owns Wal-Mart. The same Wal-Mart that just contributed $20 million to Senator Durbin’s home state of Illinois. The same Wal-Mart that just started its own rewards credit card, owns a bank in Canada, another in Mexico, and has been trying to buy one in the U.S. The same Wal-Mart that stands to benefit as a merchant from the Durbin interchange amendment just approved by the House-Senate conference committee on financial reform. (D-AR), a chief architect of financial reform legislation, is pushing for a change to a bank in her home state. Problem? Depends on who you ask.

As reported by WSJ, Senator Lincoln's proposed change would excuse Arvest Bank from a provision that could require banks to raise more capital, in Arvest's case about $115 million. Other Senate Democrats had intended only to exempt banks with less than $10 billion in capital from the provision. Ms. Lincoln wants to raise that to $15 billion, a threshold that would exempt Arvest. It is the only bank in Arkansas with between $10 billion and $15 billion of assets. According to WSJ, lawmakers routinely do things to benefit organizations in their home states, but Ms. Lincoln's move could cause headaches for other Democrats because Arvest is owned by such a wealthy and politically influential company.

At issue are provisions in the financial reform bill to bar securities from being counted as part of a bank’s capital reserve. Last week, Senate Republicans, supported by the House, proposed letting banks continue to count the securities. Ms. Lincoln broke with other Dem’s to support it. The Dem’s countered with a $10 billion in assets threshold (sound familiar?). Lincoln is now pushing for it to be $15 billion. Ms. Lincoln "believes the threshold should be high enough to ensure no bank in Arkansas is subject to these new rules on existing capital,” according to her spokesperson. Lincoln is chair of the Senate Agriculture Committee, and so carries some clout. And so, Senator Susan Collins (R-Maine), sponsor of the provision to bar securities from capital inclusion, is inclined to agree with Lincoln, according to a spokesperson.

Read the complete article.