Dear Members of Congress:

The National Community Tax Coalition (NCTC) is a nationwide network of over 600 community-based organizations, the majority of which run Volunteer Income Tax Assistance (VITA)/free tax preparation programs for over one million low-income workers across the country. As front-line service providers, we see the widespread devastation caused by the current economic crisis. One thing is clear – American workers are struggling.

Over the last decade, the primacy of corporate interests combined with the deregulation of financial institutions has created a “perfect storm” that has hit low-income families the hardest. Wealth and opportunity remain concentrated in the hands of a few, while the workers that drive the U.S. economy lack the resources needed to meet the daily needs and future hopes of their families. The precarious state of working America stems from and is exacerbated by out-of-control predatory lending practices that are designed to cheat low-income workers; now is the time to stop these practices once-and-for-all.

The financial security of American workers is a direct reflection of the overall economic and social health of this country. Yet, in communities across the country, workers have seen their path towards financial security disappear before their eyes as predatory lenders snatch up their hard- earned wages by charging exorbitant interest rates. Each year, low- and moderate-income workers spend an estimated $7.75 billion in fees and interest on payday loans and Refund Anticipation Loans (RALs). (RALs are high-interest loans taken out against a low-income taxpayer’s anticipated tax refund.) These billions of dollars end up in the deep pockets of for-profit lenders when workers’ wages could be spent in local communities, used to pay bills, invested in education, or saved for the future.

To reverse the course created by reckless neighborhood lenders and the lack of sound regulatory policy, our elected leaders must pass comprehensive legislation that protects the backbone of our economy – working families. In order to fully rebuild our economy, we cannot concentrate solely on shoring up banks, we must also invest directly in building up communities and protecting workers along their path to financial security. To this end, the undersigned affiliates of NCTC call on Congress to support legislation that will create:

1. Interest Rate Protections. Expand the Military Lending Act, which caps APRs at 36% for consumer loans for all Americans. Sen. Richard Durbin (D-IL) & Rep. Jackie Speier (D-CA) have introduced S. 500 /H.R. 1608: Protecting Consumers from Unreasonable Credit Rates Act.

2. Credit Card Protections. Advance the Credit Cardholders’ Bill of Rights to increase transparency and promote the full disclosure of fees, interest rates and rules by Credit Card companies. Sen. Christopher Dodd has introduced S. 414: the Credit CARD Act and Rep. Carolyn Maloney (D-NY) has introduced H.R. 627: the Credit Cardholders’ Bill of Rights.

3. Financial Product Protections. Establish a Financial Products Safety Commission to provide the public with stronger protections and better information regarding the broad spectrum of consumer financial products. Sen. Richard Durbin (D-IL) has introduced S.566: the Financial Products Safety Commission Act of 2009.

For more information on the National Community Tax Coalition and our efforts to protect low-income workers from predatory financial products and practices, please contact Jonathan Njus, Director of Advocacy, at 312-630-0254 or at jnjus@economicprogress.org.