TAB Bank should be penalized in its ongoing Community Reinvestment Act (CRA) exam for facilitating high-cost, low-transparency loans by a non-bank third party, the National Community Reinvestment Coalition (NCRC) and 39 community organizations said Thursday.
“TAB Bank is renting out its bank charter to a non-bank lender whose business model has prompted numerous complaints from consumers – a plain contradiction to the spirit of CRA oversight,” NCRC President and CEO Jesse Van Tol said. “CRA evaluations should consider qualitative aspects of lending practices. TAB Bank’s partnership with EasyPay is causing direct harm, and the FDIC should downgrade its CRA rating accordingly.”
NCRC on Thursday filed a formal comment letter on the matter to the Federal Deposit Insurance Corporate (FDIC), co-signed by 39 fellow organizations, detailing TAB Bank’s conduct and the evidence it defies CRA requirements.
The FDIC is currently evaluating Transportation Alliance Bank, commonly known as TAB Bank, for compliance with CRA rules. TAB Bank has one physical branch but partners with non-bank lender EasyPay to allow the latter company to offer point-of-sale financing to shoppers in stores across the country. In formal complaints filed against EasyPay’s parent company Duvera Billing Services through the Consumer Financial Protection Bureau (CFPB), many consumers say that retail clerks led them to believe that the loans were interest free, when in fact they came with rates of as high as 188%. NCRC continues to call on regulators to prevent chartered banks from partnering with non-banks to facilitate loans that evade state interest rate caps.
CRA examinations score banks partly on how their products serve the convenience and needs of the communities where they operate. TAB Bank seems to be doing poorly by this standard, judging by the hundreds of CFPB complaints about TAB Bank’s EasyPay partner: The EasyPay customers TAB Bank is making available to Duvera report confusion and alleged deception in loan terms, difficulty in getting TAB Bank’s partner to fix errors in their accounts and false reporting to credit bureaus.
A downgrade from FDIC examiners could potentially limit TAB Bank’s ability to expand its operations and help raise awareness of the concerning aspects of both EasyPay itself and the rent-a-bank practices underlying the partnership between the firms.
More information on TAB Bank and EasyPay is available here. Interested parties can join a petition urging stricter oversight of the companies here. More information on rent-a-bank regulatory workarounds in general can be found here.
The following 40 organizations signed the comment letter:
National Community Reinvestment Coalition
Consumer Federation of America
Pima County Community Land Trust
California Coalition for Rural Housing
California Reinvestment Coalition
Vermont Slauson EDC
People’s Opportunity Fund
727 Mgt LLC
Delaware Community Reinvestment Action Council, Inc.
African American Alliance of CDFI CEOs
Best of the Bess Inc
Real Estate Education And Community Housing
St. Petersburg Neighborhood Housing Services, Inc. dba Neighborhood Home Solutions
Community Reinvestment Alliance of Florida
Goldenrule Housing & Community Development
Neighborhood Improvement Association
Georgia Advancing Communities Together, Inc.
Gary Housing Authority/Northwest Indiana Development Corporation (NIDC)
PFC Black Chamber of Commerce Inc
Maryland Consumer Rights Coalition
Coastal Enterprises, Inc.
Detroit People’s Platform
Jewish Community Action
St. Louis Equal Housing & Community Reinvestment Alliance (SLEHCRA)
MS Communities United for Prosperity (MCUP)
Welfare Reform Liason Project (WRLP)
Sandhills Community Action Program, Inc.
Devotion USA, Inc.
Fair Finance Watch
Rockland Housing Action Coalition, Inc.
Homes on the Hill CDC
CASA of Oregon
Southern Dallas Progress Community Development Corporation
TCH Development, Inc