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Empire Justice Comments on Republic Bancorp's Application for a Charter Conversion

September 12, 2008


John Reich
Director, Office of Thrift Supervision
1700 G Street NW
Washington, D.C. 20552


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


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

Dear Mr. Reich and Mr. Dwyer:

Empire Justice Center requests that the Office of Thrift Supervision hold a formal, public meeting on Republic Bancorp’s (“Republic”) application for a charter conversion from a bank holding company to a savings and loan holding company. We are requesting the public meeting because we are concerned how Republic Bancorp generates a significant portion of its revenue from refund anticipation loans (RALs).

Therefore, Empire Justice also asks the OTS to scrutinize Republic’s refund anticipation lending as its current regulator, the FDIC, has.  Empire Justice Center is a not-for-profit organization working throughout New York State to protect the legal rights of the poor. Along with the United Way of Greater Rochester, Empire Justice leads the C.A.S.H. coalition (Creating Assets, Savings, Hope) that helps working families get the money and assistance they’ve earned, primarily through our free tax preparation services, helping low-moderate income wage earners obtain their Earned Income Tax Credit, and one-on-one financial coaching. We hear from our C.A.S.H. clients first hand the detrimental effects of RALs on lower-income families.

RALs, which carry effective annual percentage rates from 40% to over 500%, disproportionately affect lower income consumers. In 2003, 25 percent of New Yorkers eligible for the Earned Income Tax Credit (EITC) applied for RALs, as compared to only 4 percent of those not eligible for the EITC. The attached map illustrates the disparate impact of RALs on low-moderate income neighborhoods in the city of Rochester and surrounding areas.

Republic is one of the handful of RAL lending banks in the nation. Many of these banks either significantly reduced their RAL lending and/or reduced their loan fees. In contrast, Republic Bank maintained its high fees, and has increased both its RAL loan volume and its base of independent preparers that offer its RALs. In fact, Republic vigorously pursued independent preparers shed by other RAL lending banks.  Republic also has a troubling track record of providing banking services to payday lenders such as Advance America. Republic Bank received regulatory warnings from the FDIC for Equal Credit Opportunity Act violations in its RAL program.

We call on the OTS to hold a public meeting 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 and to the requested change in charter. This wider participation will help to rectify the inadequacy of written comments to demonstrate the harm done to local low and moderate-income tax filers by Republic’s refund anticipation lending.

For the reasons set forth above, Empire Justice Center calls 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.

Barbara van Kerkhove, Ph.D.
Researcher/Policy Analyst

For more information, please contact:

Barbara van Kerkhove

Empire Justice Center
Telesca Center for Justice
One West Main Street, Suite 200
Rochester, NY  14614

(585) 454-4060
(585) 454-2518


Supporting Documents:

Percentage of Income Tax Returns with RALs- Rochester Map