Future of RALs Now In Doubt

Refund anticipation loans may cease to be available after the 2010 tax season, according to some comments from tax preparers.

An internal memo sent by River City Bank to its tax prep partners references an FDIC communication that suggests that RCB prepare to exit its RAL business.

This is not confirmed.  At the same time, the market seems to be moving in response to this news.  Shares of H&R Block are down almost 15 percent this morning and now trading at a year low. That makes no sense, of course, because Block would not be impacted by FDIC action.  HSBC provides RALs for Block.  HSBC is regulated by the Office of the Comptroller of the Currency.  Block Bank is regulated by the Office of Thrift Supervision.

JP Morgan Chase, funder of RALs to Mo’ Money Taxes and approximately 13,000 independent preparers, would also be passed over.

For now, this is unconfirmed.