Bove said that the Bluebird service "raises a series of questions as to whether a major slice of consumer finance activities have now slid into the shadow banking market away from the scrutiny of the regulators." One question is "whether the country will now deal with a two tier financial system. One tier is heavily regulated. The other is not regulated and where funds are transferred between companies in a murky area of non-disclosure," he said.
It remains to be seen how the Consumer Financial Protection Bureau will react, and how, or if, the agency will regulate the Bluebird service, but there is no doubt that today's move by Walmart and American Express is a very important development for the financial services industry.
Bove said that "If Wal-Mart is able to go up market with its products, it will hurt the banks. This is because banks are now relying on price increases on many of the products that Wal-Mart hopes to give away under its new card arrangement. Moreover, if Wal-Mart gets away with doing banking as a retailer many more retailers are likely to enter the fray and the price competition they represent for banks will be formidable."
Walmart's shares rose slightly to close at $75.25, while American Express was up slightly, closing at $58.82.