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 so-called refund anticipation loans.
Tax preparers offer tax filers the loans in anticipation of the taxpayer's tax refunds. Advocates and consumer groups have criticized the loans for generally being far more expensive than they need to be and for being 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.
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.
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