Atlanta, GA, June 7, 2006--Home Depot struck back at comments from a key real estate industry group that its proposed purchase of a small bank could harm competition, saying homeowners have many ways to finance home projects.
The National Association of Realtors said it had asked federal regulators to reject Home Depot's plan to buy EnerBank USA, citing potential competitive harms.
In a statement on Tuesday, the group said it told the Federal Deposit Insurance Corp., in a letter that the buyout could create potential conflicts of interest, pose risks to the U.S. financial system and discourage competition in financial services.
The association said it raised similar objections to a separate bid by Wal-Mart to start limited banking operations.
Home Depot, which is branching out into contractor markets, announced plans to buy EnerBank from CMS Energy Corp. in May. The FDIC must approve the deal.
Thomas Stevens, president of the National Association of Realtors, said the purchase would create "an inherent conflict of interest" because Home Depot would have an incentive to channel credit through unsecured loans to customers of contractors who are the retailer's customers.
"A bank cannot be an 'honest broker' in the provision of financial services if it also competes with its commercial customers and potential customers," Stevens said.
If the Home Depot deal is cleared, "EnerBank will have a built-in bias toward favoring applicants who do business with contractors who are customers of its parent," he added.
In response, Home Depot said homeowners have many options in addition to loans offered by EnerBank for financing home improvements,including credit cards and home equity loans.
“If approved, EnerBank loans will be available to customers of other retailers as well," Home Depot said on Tuesday.
Chartered in Utah, EnerBank provides loans for kitchen and both renovations, window replacement and other projects through professional contractors.
"EnerBank has a proven business model that has an established history of regulatory compliance," Home Depot said.
"EnerBank is in the home improvement business and deals with contractors -- there's a great strategic fit with our business and we have the resources to support its growth," it added.
In a recent filing with the FDIC, Home Depot said it hopes to expand EnerBank's offering of home improvement loans. It said it had no plans for EnerBank to issue credit or debit cards, process credit card payments or open branches.
