FDIC OIG Issues Report Criticizing Action against Refund Anticipation Loans

March 15, 2016

On Tuesday, March 15, 2016, the FDIC Office of Inspector General (OIG) issued a critical review of the agency’s actions several years ago in preventing three banks from offering refund anticipation loans (RAL), and establishing a policy of “moral suasion” to prevent banks from offering them.  The OIG blasted the agency for its use of supervisory powers to impose “high costs” on institutions offering the legal products with little to no evidence of consumer harm.  The OIG called on the agency to reconsider its leadership practices, processes and procedures, as well as the individual conduct of FDIC staff involved.  

The report concludes, “In our view, the FDIC must candidly consider its leadership practices, its process and procedures, and the conduct of multiple individuals who made and implemented the decision to require banks to exit RALs.”