The value of the “bottom line” over humanity …. Payday loans by META Payment Systems

Bank regulators shut down MetaBank payday loans

Posted on October 14, 2010 at 3:00 PM

Updated Thursday, Oct 14 at 10:32 PM

DES MOINES, Iowa (AP) — An Iowa bank has been told by federal regulators to stop making short-term payday and tax refund loans to customers with prepaid debit cards because the program violates federal unfair or deceptive trade practice laws.

MetaBank, based in Storm Lake, Iowa, was told by the Office of Thrift Supervision, the federal government’s bank regulator, to stop offering lines of credit through its iAdvance program by Wednesday.
In a regulatory filing, the bank’s holding company, Meta Financial Group Inc., said it was informed on Oct. 6 to suspend the iAdvance credit by the deadline.
The program offers short-term high-interest loans to customers with prepaid debit cards.
In addition to payday loans, the program is often used to borrow money against anticipated tax refunds.

Banking regulators have told MetaBank that it must seek written approval to enter into any new third-party relationship agreements for credit products, deposit products including prepaid cards, or automatic teller machine products.

The bank also cannot originate any income tax refund anticipation loans and cannot offer tax refund transfer processing during the 2011 tax season without prior written approval of regulators.

The orders came after regulators conducted an examination of the bank and met with bank officials, the regulatory filing said.
The suspension of the loans could have a significant effect on the revenue pulled in by the bank’s Meta Payment Systems division, which operates the programs.
A recent financial report shows the bank relies heavily on its MPS division for revenue and profit.
The report covering the third quarter ended June 30 indicates the MPS division generated net income of $3 million, up from $100,000 in the same quarter a year earlier.
The division posted a $3.8 million increase in gross profit, the company said.
The company’s quarterly revenue growth of $28.9 million from $25.3 million a year earlier was mostly attributed to the MPS division’s $2.5 million increase in fee revenue, a 16 percent boost, attributed mostly to growth in credit programs.
The bank said in regulatory documents filed Tuesday that a substantial portion of its MPS profit will be eliminated by the forced discontinuance of its iAdvance program and tax-related programs.
“In addition, the discontinuance of the iAdvance program may result in elevated rates of nonpayment on outstanding iAdvance loans,” the company said. “We cannot predict the effect on the results of operations or financial condition of the bank or the company of future OTS actions.
“The regulators also are expected to require the bank to reimburse iAdvance borrowers some amount of money, the bank said.
A bank spokeswoman did not immediately return a call seeking comment.
A spokesman for the Office of Thrift Supervision declined to comment.

Consumer advocacy groups have pushed banking regulators to end high-interest payday loan programs connected to debit cards, claiming they prey on low-income consumers.

Customers paid a fee of $2.50 for each $20 increment on an iAdvance loan.
The loans are applied to a prepaid debit card and secured by the next direct deposit from a paycheck.
The loans typically carried a minimum interest rate of 120 percent but rates could be as high as 650 percent for loans taken out a week or less before pay day, consumer groups said.MetaBank’s problem spread to its partner NetSpend Holdings Inc., which had planned on pricing an initial public offering of stock on Thursday and begin trading on Friday under the “NTSP” symbol on the Nasdaq exchange.
The Wall Street Journal reported Thursday that NetSpend was delaying the IPO pricing until Monday for trading on Tuesday.A company spokesman said he couldn’t comment due to a required quiet period that is imposed around initial stock offerings.
The company, based in Austin, Texas, said in a regulatory filing that about 71 percent of its active prepaid cards are issued through MetaBank as of June 30.
Documents filed Wednesday said The MetaBank problem isn’t expected to have a material effect on NetSpend’s financial condition or operations.
Shares of Meta Financial Group slid 17 percent on Wednesday and fell another 6.6 percent on Thursday. They closed at $20.79, down $1.46.


The METABANK groups have shown the world that they cannot self-regulate in any way that actually addresses consumers’ real needs.

We do not believe that America was created so that some could get obnoxiously wealthy off of the labor and toil of others who suffer simply as they strive to live and remain impoverished.

Consumers must speak up about their rights.

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