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R.I.P. R.A.L.?

No quod sanctus instructior ius, et intellegam interesset duo. Vix cu nibh gubergren dissentias. His velit veniam habemus ne. No doctus neglegentur vituperatoribus est, qui ad ipsum oratio. Ei duo dicant facilisi, qui at harum democritum consetetur.

As reported today, 12/9/11, Republic Bank has settled with the FDIC to shut down it’s Refund Anticipation Loan (RAL) Business.  As part of the settlement, Republic will pay a $900,000 fine, and completely shut down the RAL by April 30th, 2012.  

Republic was originally sued by the FDIC for $2 Million for RAL program violations , and then Republic counter-sued to protest those violations.  All suits will be dropped as part of the terms of the settlement.

Republic Bank is the only bank continuing to offer the RALs after the IRS refused to provided a debt indicator to third parties.  This has caused internal and external regulations of the RAL to increase, and the approval rate for RALs to decrease dramatically. This coupled with extra Bank Fees and Transmitter surcharges makes the RAL very unattractive to providers and consumers.

So is this the death of the RAL?  It would certainly appear so.  The Refund Anticipation Check (RAC) is safer and only takes a few more days to process.  All any tax preparation firm really wants is a level playing field.  The FDIC could have saved a lot of time and money by simply ruling RALs illegal, as opposed to slowly choking the life out of the product for the last few years.  The bottom line is that R&G Brenner–and all tax firms–no longer has to offer this inferior product to remain competitive.  Ding Dong, the RAL is dead…until another bank devises a way to skirt around the rules.

Source: Business First