MetaBank has stepped in to fill the void that might be created if Pacific Capital (Santa Barbara Bank & Trust) is no longer able to fund refund anticipation loans (RALs).

This is a development with two main impacts.  First, it guarantees that financial problems at Pacific Capital will not prevent Jackson Hewitt from offering refund anticipation loans this year.  Second, it provides a line of credit to refund anticipation loans with high interest rates.  The rates, by MetaBank’s own calculation, are 150 percent APR.

In a brief reference on their latest 10-K, MetaBank makes reference to a pilot program that began this spring to fund RALs for “a major tax preparation firm.”

During fiscal 2009 the Bank participated in tax refund anticipation loans with a major tax preparation firm after participating in a test program with that firm in fiscal 2008.

The major tax preparer is Jackson Hewitt (JTX).  Jackson Hewitt, it turns out, was not going to be left holding (more…)

The office of Virginia Governor Tim Kaine announced a plan by Virginia to offer payday loans to cash-strapped state employees.

The Virginia State Employee Loan Program will offer payday loans through the Virginia Credit Union with six-month terms bearing an interest rate of 24.99 percent.  Borrowers can get loans of $500.  Loans cannot overlap, so borrowers are limited to two loans per year.

Virginia is attempting to provide money to consumers at a time when the economy is tight.  Many other sources of (more…)

Stephen Colbert, the talk show host and Presidential candidate, has found a new whipping boy: Congressman Louis Gutierrez’s new Payday Loan Reform Act (HR 1214).

Here’s Colbert with his take on the bill.

He makes a few good points:

• We’re talking about reform from an Illinois Congressman!
• anemic regulation will be, well, anemic.  And it will be Federally sanctioned.
• interest rates of 400 to 800 percent are perfectly appropriate when you get a 2000 percent raise on your next paycheck.
• Gutierrez’s top campaign supporter was QC Holdings ($10,100 in contributions.)