Green Dot 2015 Annual Report Download - page 22

16
Board may limit our ability to pay dividends or fund stock repurchases, or if we become less than adequately capitalized,
require us to raise additional capital. In addition, as a bank holding company and a financial holding company, we are
generally prohibited from engaging, directly or indirectly, in any activities other than those permissible for bank holding
companies and financial holding companies. This restriction might limit our ability to pursue future business opportunities
which we might otherwise consider but which might fall outside the scope of permissible activities.
Moreover, in response to the financial crisis of 2008 and the Wall Street Reform and Consumer Protection Act, or
the Dodd-Frank Act, banking supervisors in the United States continue to implement a variety of new requirements on
banking entities. Some of these requirements apply or will apply directly to us or to our subsidiary bank, while certain
requirements apply or will apply only to larger institutions. Although we cannot anticipate the final form of many of these
regulations, how they will affect our business or results of operations, or how they will change the competitive landscape
in which we operate, such regulations could have a material adverse impact on our business and financial condition,
particularly if they make it more difficult for us or our retail distributors to sell our card products.
Changes in laws and regulations to which we are subject, or to which we may become subject, may increase
our costs of operation, decrease our operating revenues and disrupt our business.
The provision of banking services, prepaid financial services and tax refund processing services is highly regulated
and, from time to time, the laws and regulations affecting these industries, and the manner in which they are interpreted,
are subject to change and legal action. Accordingly, changes in laws and regulations or the interpretation or enforcement
thereof may occur that could increase our compliance and other costs of doing business, require significant systems
redevelopment, or render our products or services less profitable or obsolete, any of which could have an adverse
effect on our results of operations. For example, we could face more stringent anti-money laundering rules and
regulations, as well as more stringent licensing rules and regulations, compliance with which could be expensive and
time consuming. In addition, adverse rulings relating to the industries in which we participate could cause our products
and services to be subject to additional laws and regulations, which could make our products and services less profitable.
If additional regulatory requirements were imposed on the sale of our products and services and our bank, the
requirements could lead to a loss of retail distributors or tax preparation partners, which, in turn, could materially and
adversely impact our operations. Moreover, if our products are adversely impacted by the interpretation or enforcement
of these regulations or we or any of our retail distributors or tax preparation partners were unwilling or unable to make
any such operational changes to comply with the interpretation or enforcement thereof, we would no longer be able
to sell our products and services through that noncompliant retail distributor or tax preparation partner, which could
have a material adverse effect on our business, financial position and results of operations.
State and federal legislators and regulatory authorities are increasingly focused on the banking and consumer
financial services industries, and may propose and adopt new legislation that could result in significant adverse changes
in the regulatory landscape for financial institutions and financial services companies. In December 2014, the Consumer
Financial Protection Bureau, or CFPB, issued a notice of proposed rulemaking requesting comment on proposed
amendments to Regulation E, which implements the Electronic Fund Transfer Act and Regulation Z, which implements
the Truth in Lending Act. The proposed rules seek to, among other things, create comprehensive consumer protections
for prepaid financial products, create a new disclosure regime regarding fees charged for acquiring and using prepaid
cards, and impose new requirements on any credit features associated with prepaid accounts. In November 2015, the
CFPB updated their regulatory rulemaking agenda and anticipates a final rule in spring 2016.
If the CFPB's rulemaking or other new regulations or laws result in changes in the way we are regulated, these
regulations could expose us to increased regulatory oversight, more burdensome regulation of our business, and
increased litigation risk, each of which could increase our costs and decrease our operating revenues. Furthermore,
limitations placed on fees we charge or the disclosures that must be provided with respect to our products and services
could increase our costs and decrease our operating revenues. It is difficult to determine with any certainty what
obligations the final rules, if any, might impose or what impact they might have on our business.
Changes in laws and regulations, or our failure to comply with existing laws and regulations, applicable
to our tax refund-related services could have a material adverse effect on our business, prospects, results of
operations, and financial condition.
We derive a significant portion of our total operating revenues and earnings from tax refund processing and
settlement services. The tax preparation industry is regulated under a variety of statutes in addition to those regulations
currently applicable to our legacy products and services, all of which are subject to change and which may impose
significant costs, limitations or prohibitions on the way we conduct or expand our tax refund processing and
related services. In recent years, state legislators, state attorneys general, and regulators have increased their focus
on the tax preparation industry including tax refund processing services and the use thereof by tax preparation firms.
Laws making such services less profitable, or even unprofitable, could be passed in any state at any time or existing