Woodstock calls on federal banking regulator to scrutinize tax refund lending

Written by Administrator on September 3, 2008 - 2:00am

As a major tax refund lender seeks to change charters, the Office of Thrift Supervision needs to hold a hearing to give the public a chance to tell its side of the story about high cost refund anticipation lending.

Republic Bancorp, one of a handful of banks making high cost tax refund loans through paid tax preparers throughout the country, has submitted an application to change regulators, raising concerns of consumer advocates throughout the country.  In the Chicago region, 38 percent of all Earned Income Tax Credit recipients are using these tax refund anticipation loans to get their refund.  With interest rates often in the triple digits, this product costs lower-income working families in the region over $48 million, based on information from a 2006 Woodstock Institute report.

Many of Republic’s competitors have significantly reduced their tax refund lending or reduced their loan fees, or both. In contrast, Republic maintained its high fees, and has increased both its tax refund lending loan volume and its cadre of independent preparers offering its refund loans. In fact, Republic vigorously courted independent preparers shed by other tax refund lending banks. Republic also has a troubling track record of providing banking services to payday lenders.

Woodstock has contacted the Office of Thrift Supervision and requested a hearing so that community groups and customers unable to submit a written comment will have the chance to raise their objections to Republic’s business practices. This wider participation will help to rectify the inadequacy of written comments to demonstrate the harm done to local lower-income tax filers by Republic’s refund anticipation lending.

 

Take Action:  Contact the OTS to Request a Public Meeting

{philaform 27} 

 

By clicking send letter, you will submit the letter below to the Office of Thrift Supervision.  All comment letters are public record.

 

Mr. Donald Dwyer
Director of Applications, Office of Thrift Supervision
1700 G Street, NW
Washington, DC 20552

Re: Request for Meeting on Application R2-2008-0202

Dear Mr. Dwyer:

I am contacting you on behalf of {your organization} to request that the Office of Thrift Supervision (OTS) hold a formal, public meeting on Republic Bancorp’s application for a charter conversion from a bank holding company to a savings and loan holding company.  Since Republic is a major tax refund lender, the Office of Thrift Supervision needs to hold a hearing to give the public a chance to tell its side of the story about high cost refund anticipation lending.

Republic Bancorp is one of a handful of banks making high cost tax refund loans through paid tax preparers throughout the country.  In the Chicago region, 38 percent of all Earned Income Tax Credit recipients are using these tax refund anticipation loans to get their refund.  With interest rates often in the triple digits, this product costs lower-income working families in the region over $48 million, based on information from a 2006 Woodstock Institute report.

Many of Republic’s competitors have significantly reduced their tax refund lending or reduced their loan fees, or both. In contrast, Republic maintained its high fees, and has increased both its tax refund lending loan volume and its cadre of independent preparers offering its refund loans. In fact, Republic vigorously courted independent preparers shed by other tax refund lending banks. Republic also has a troubling track record of providing banking services to payday lenders.

For these reasons, we call on the OTS to hold a formal, public meeting as a matter of fundamental public accountability and transparency in decision-making, and to ensure that Republic Bancorp’s abusive tax refund anticipation lending and other questionable business practices are adequately addressed.

We look forward to hearing from you promptly.

Respectfully,

{your name}

{your organization}

 

 

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