You Can Bank On It

As tax day approaches, a big revenue source dries up for one of Kentucky’s largest banks, at least until next January or Congress or the Kentucky General Assembly shuts it down.

Lax Kentucky banking laws have allowed state chartered banks like Republic of Louisville, according to the Consumer Federation of America (CFA), to charge rates as high as 161% on tax refund anticipation loans.

Sen. Charles Schumer, a New York Democrat and member of the Senate Banking Committee, said in a statement "people all over the country are getting ripped off by these so-called refund loans, and it's time to stop them dead in their tracks." He called the loans "usurious."

This is not the first time Republic has violated defacto Federal Regulations manipulating loopholes in Kentucky’s banking laws. In a Feb. 17, 2006 letter to the bank, the Federal Deposit Insurance Corporation (FDIC) "cited inherent risks associated with payday lending activities and asked the bank to consider ending this line of business," according to a filing with the U.S. Securities and Exchange Commission.

This was prompted by a letter to the FDIC from over 80 national consumer groups that complained about Republic’s abusive practices in Pay day loans.

How much longer will our legislators continue to put the interests of the banking lobby over interests of citizens of the Commonwealth?