(July 24, 2014) WASHINGTON — Rep. Cedric Richmond, D-New Orleans, proposed legislation Thursday that would allow the U.S. Postal Service to offer banking services such as check cashing, savings and checking accounts and small loans.
He said the proposal, endorsed in January by the Postal Service’s inspector general, would improve the agency’s finances while offering services to under-served Americans.
“In the New Orleans area alone, 181,000 households do not have access to a full range of financial services,” Richmond said. “These are primarily low-income households that are forced to pay exorbitant interest rates to predatory lenders in order to borrow. Allowing the Post Office to offer some basic financial services would save these households thousands of dollars every year, and put the USPS on more stable financial footing.”
Richmond’s bill, The Providing Opportunities for Savings, Transactions and Lending Act, or POSTAL Act, would also require the Postal Service to offer a “postal card,” that would act as a debit card allowing customers to conduct in-store, mobile and online transactions. Already, some Republicans have ridiculed the idea.
“If you have an organization that has a median age of workforce of 60, it has facilities located often in the wrong places and often too many of them, it has been losing high-single-digit billions of dollars every year, it has a labor force that is not responsive to change… would this be the organization… on which you would build this new financial sub-enterprise?” Rep. Darrel Issa, R-Calif., chair of the House Oversight and Government Affairs Committee, told the American Banker. “Don’t assume that somebody’s new idea for a business model is going to add anything to the bottom line of the post office.”
Others are likely to worry about what adding these additional services would mean for lines for those patrons simply trying to buy some stamps or mail a package.
But the Postal Service Inspector General said other nations have successfully added financial services to their Post Offices.
“Around the world, financial services are the single biggest driver for new revenue for postal operators, and the conditions may be ripe for similar success for the U.S. Postal Service. If just 10 percent of the money under-served Americans currently spend on alternative financial services were instead spent on more affordable products from the Postal Service, it could generate some $8.9 billion in new revenue,” the Inspector General said in a January White Paper.