MoneyGram Bank Ruling Will Keep Financial Cos. On Alert

Law360, New York (January 15, 2015, 4:34 PM EST) -- The failure of MoneyGram International Inc.'s bid to claim bank status and write off hundreds of millions in bad securities as ordinary losses is a warning shot to pseudo-bank financial institutions, but the decision also signals that the answer truly does come down to a facts and circumstances test.

Earlier this month, the U.S. Tax Court handed MoneyGram a steep loss when it barred the money services company from writing off more than $540 million in securities that tanked in the 2008 financial crisis as ordinary losses — treatment to which banks are entitled. Although MoneyGram argued that it accepts deposits...

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