The Office of Thrift Supervision announced H&R Block's approval for a savings bank charter on March 15, the same day New York Attorney General Eliot Spitzer filed a $250 million civil lawsuit against Block for fraudulently marketing Express IRA's. 85% of Express IRA customers lost money. H&R Block repeatedly used the company's Express IRA program to justify the need for a Block bank.
The approval of a bank charter for Block is one of the first actions taken by new OTS Director John Reich. Once again, the Bush Administration has abandoned consumers in favor of big corporations.
Yet approval of the bank was conditional, and can be blocked if new information having a "material adverse bearing" on the bank's proposed operations comes to light.
Send a letter via e-mail asking the OTS to reverse its decision, by clicking here.
Let the OTS know H&R Block must not be allowed to expand consumer fraud!
In the Director's Order issued by OTS head John Reich on March 14 outlining the decision, the federal agency disclosed that H&R Block plans to transfer "a significant portion of the present Express IRA and money market account funds to the Savings Bank," and that Block's bank "will be the custodian of new Express IRA accounts."
In testimony during an OTS hearing on its bank charter application in October, 2005, H&R Block Vice President Bernard M. Wilson repeatedly used the Express IRA program to justify the need for a Block bank. He said Block had opened 500,000 Express IRA's in the past five years, which proved the company "can act really in a way that most traditional banks are not choosing to...we think we can fill that gap for low income consumers."
The reality, as revealed in New York State's lawsuit, is that Block advised customers to buy an "unsuitable, fraudulently marketed, poorly performing, fee-ridden 'retirement vehicle' called the Express IRA" that shrinks over time. 85% of Express IRA customers lost money because their only investment option was a money market account paying an interest rate too low to cover the program's unadvertised fees.
During its approval process, the OTS did not communicate with New York State about the pending fraud probe of H&R Block, although H&R Block told the agency they were under investigation. "We had communication with H&R Block, but not the attorney general," OTS spokesman Chris Smith said. "The company told us there was an investigation going on." (National Mortgage News, 3/20/06)
Send a letter via e-mail asking the OTS to reverse its decision!
For more information on this campaign, read the on-line press release from the National Consumer Law Center, the California Reinvestment Coalition, Inner City Press / Fair Finance Watch, the Woodstock Institute, and the Community Reinvestment Association of North Carolina.