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Banking Interpretations

NYSBL 367; 641

January 17, 2003

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Re: [ ] - Loan Disbursement Program

Dear [ ]:

Your letter of October 1, 2002, to Acting First Assistant Counsel Gene Brooks, has been referred to me for reply. As we understand it, [ ] ("Corporation"), a licensed check casher in New York, has entered into a software licensing agreement with [ ], whereby the Corporation will be offering a product known as [ ], a computerized tax preparation program. It is contemplated that using [ ], the Corporation will simultaneously electronically file a customer's tax return with the Internal Revenue Service and [ ] ("Bank"). Upon receipt of this information the Bank will issue a Refund Anticipation Loan ("RAL"). The Bank will then authorize the Corporation to generate a RAL check to the Corporation's customer and issue it to him. The customer can then utilize the Corporation's check cashing service or cash the check elsewhere.

You have asked for us to review the proposed program to ensure that it is in compliance with the laws and regulations of the Banking Department. The Corporation may conduct the business described in the October 1, 2002 letter without first obtaining any approval or license from the Banking Department, since the Corporation is merely disbursing the RAL check to a customer or, if the customer so chooses, the proceeds of the RAL from the Bank.

An issue does arise concerning branching by the Bank. However, given the fact that the Bank is a federal thrift, the Banking Department has, to date, not challenged the position of the Office of Thrift Supervision that a federal thrift may disburse loan proceeds at locations that are not authorized branches.

I trust this letter as been of assistance to you.

Sincerely yours,

Jay Kane 
Assistant Counsel

cc: Paul Fazio