Experts Debate USPS Financial Services
Panelists cast doubts on whether the U.S. Postal Service could provide financial services to the under banked or unbanked during a webcast streamed Wednesday by the Pew Charitable Trusts.
The forum followed a January report from the U.S. Postal Service’s inspector general that said the USPS is well positioned to provide the services.
Ryan Donovan, senior vice president for legislative affairs at CUNA, and Dong Hong, regulatory counsel for the Consumer Bankers Association, participated in the event as panelists.
Hong asked in his prepared remarks if the post office were to begin offering financial products and services, would it be as regulated in doing so as banks and credit unions?
“As many of you probably recognize, banks face a series of extensive and sometimes overlapping federal and sometimes state regulations,” Hong said. “If the post office were to offer financial services would is also face the same regulations?”
After expressing regret about having to be the bad guy for asking a very difficult question, Hong wondered who would pay if a fiscally strapped post office had to pay a large civil fine or other regulatory penalty for some financial services failure.
“I can’t help but wonder, who would pay that bill,” Hong asked.
Donovan noted that credit unions and credit union services, through shared branching and fee-free ATMs, were widely available and counter the myth that credit unions are inconvenient. The USPS has touted its locations in nearly every community in the nation as a reason it would make a good financial services provider.
Donovan also said credit unions remain skeptical that the U.S. Postal Service is the solution to the problem of unbanked or under banked Americans.
Other speakers appearing at the event included Rep. Darrell Issa (R-Calif.) who said the USPS does not have the facilities nor trained staff to offer financial services.
USPS Inspector General David Williams said postal services in other industrialized nations provide financial services, adding the U.S. is the exception, not the rule. He also underscored the urgency to offer alternatives to payday lenders and check cashers, saying the underbanked spend as much as 10% of their income on financial services fees, roughly as much as they spend on food.
Williams also said the post office already offers some financial services, issuing millions of money orders to consumers each year.