So will California quit issuing them for unemployment?
I don't think so. From the Bancorp FDIC consent decree, page three:
The Bank will be restricted from issuing new non-benefit related reloadable prepaid card programs
As I read it, the FDIC doesn't seem to concerned about benefit related reloadaable prepaid cards.
The Bancorp FDIC consent decree:
http://www.snl.com/Cache/24005655.pdf?IID=4054569&FID=24005655&O=3&OSID=9