X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON — A coalition of consumer and financial activist groups has denounced a bank’s announcement that it will use some of the funds it received under the Troubled Asset Relief Program to fund refund anticipation loans.Tax preparers offer tax filers the loans based on the taxpayer’s anticipated refund. Advocates and consumer groups have criticized the loans as more expensive than they need to be and a bad deal for consumers. They also charged that the loans are most heavily marketed to lower income tax filers who are eligible for the earned income tax credit. Nearly two-thirds of RAL borrowers are EITC recipients, yet they make up only about 17% of taxpayers.The bank, Santa Barbara Bank and Trust, funds the loans offered by tax preparer Jackson Hewitt. Neither the bank nor its holding company, Pacific Bancorp, has commented on the objections.“Santa Barbara is feeding off of taxpayer money twice in making RALs this upcoming tax season,” stated Peter Skillern, executive director of the Community Reinvestment Association of North Carolina. “First, Santa Barbara is skimming off hundreds of millions in refund dollars in making RALs to working families. Second, it is funding its RAL loans using tax dollars from the bailout.”In addition to Skillern’s group, the coalition includes the Consumer Federation of America, the Woodstock Institute and the National Consumer Law Center.Santa Barbara made 1.83 million RALs in 2007 earning $118 million in fees, the critics charged, arguing that it is one of the higher priced RAL lenders, charging about 40% more than some of its competitors. Santa Barbara relies heavily on revenue from RALs and a related product, refund anticipation checks; these products at one point constituted 56% of the bank’s after-tax income, the group of organizations said.“Californians are disappointed to see a supposed community bank in wealthy Santa Barbara take federal money while continuing to offer predatory tax refund loans to earned income tax credit recipients and other Californians in financial need,” stated Alan Fisher, executive director of the California Reinvestment Coalition.–[email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.