The U.S. Postal Service, since privatization, hasn't been able to run itself profitably as a mail deliverer. So of course it makes sense that it would stray into banking. Checks are delivered by mail, right? It's a synergy just waiting to happen.
That's the way the postal service's brain trust sees it. Arguing that lots of low income folks aren't well served by the nation's banking system, the USPS has raised the possibility that, with its offices located throughout all communities, it could offer basic banking services to this underserved population.
According to a report on the online news source The Hill, "the USPS could likely add billions of dollars a year to its coffers by offering prepaid cards or loans to the 68 millions adults who currently get little or no services from banks."
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The Patient Protection and Affordable Care Act presents a perfect opportunity. To access the low-cost health insurance options available to millions of uninsured people, one must have either a checking account or a credit card. In theory, the low income uninsured would be racing to the local post office to acquire such services in order to obtain health insurance.
The prepaid cards alluded to by the USPS could, in theory, be used to buy health insurance, as well.
The idea is the USPS would partner with banks to offer such services, perhaps in the same way supermarkets offer national brand banking services and pharmacy services under one roof.
"If the Postal Service partnered with banks to offer more services, those customers would then have an alternative to the often hefty fees charged by payday lenders and other banking alternatives, the inspector general said," said The Hill.
U.S. Senate Democrats are warming up to the concept, The Hill reported.
"Rep. Elijah Cummings, Md., the top Democrat on the House Oversight Committee, had released legislation to give the USPS more authority to open new revenue streams like check cashing even before the inspector general's recommendations," the news portal said. "In recent days, Sen. Elizabeth Warren,D-Mass., the populist champion embraced by progressive groups, endorsed the idea in a Huffington Post op-ed."
The GOP and the banking industry in general take a dim view of the plan, who insist its far from the win-win Democrats and the inspector general claim. Here are two sound bites included in The Hill's account of this mail-order strategy:
"There are unique things that the Postal Service can offer. But being your local loan shark is not one of them," said Rep. Jason Chaffetz, R-Utah.
"This is the worst idea since the introduction of the Edsel," said Camden Fine, the chief executive of the Independent Community Bankers of America.
"They can't even deliver your mail on time. The track record speaks for itself," Fine added. "If this was about competition, give me all the sloppy competitors I can get."
The Hill noted the USPS is prohibited from offering non-mail services.
"The USPS — which already sells money orders — could explore new financial services options within its existing authority," the Hill reported.
Right now, it's just another idea being floated by the USPS in its ongoing battle to prove that, some day, some way, it will operate in the black.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
