The U.S. Postal Service has been thrown on the defensive over a proposal to begin offering financial services to lower income people who banks generally avoid.
You know that because the postal service has come out with a rare statement attacking the Office of the USPS Inspector General for advocating that USPS provide financial services to this disadvantaged demographic group.
Last month, the Inspector General’s office issued a white paper calling for the USPS to deepen its financial service offerings which it believes the postal service already has statutory authority to do
The USPS currently offers money orders, electronic funds transfers, and the cashing of U.S. Treasury checks. Widening its services could bring in as much as $1.1 billion a year after five years, the USPSOIG argues.
These new services could include payroll check cashing, domestic money transfers between post offices, bill payment services, international money transfers to more countries, and other affordable products.
This latest USPSOIG paper follows a report last year encouraging the postal service to start offering financial services to as many as 68 million people who typically don’t have access to conventional banking services in their neighborhoods https://www.uspsoig.gov/sites/default/files/document-library-files/2014/rarc-wp-14-007.pdf. All too often, these people are forced to rely on such abusive and exorbitant operators as payday lenders and pawn shops.
In its uncharacteristic rebuttal, the USPS reveals a reluctance to go against the financial industry even though doing so might help the deficit ridden postal service fill its coffers. The mere fact that the USPS felt the need to do this suggests that some very powerful interests may have gotten to it.
Overall, the postal service said it did not want to venture beyond its core delivery services. What about its abortive 2011 plans to begin selling beer and wine?
It’s quite disingenuous to speak of core products since the U.S. Post Office Department offered postal savings accounts until 1967, according to Slate.com http://www.slate.com/articles/news_and_politics/history/2014/08/postal_banking_already_worked_in_the_usa_and_it_will_work_again.html.
At the time, President Lyndon Johnson said doing away with postal banking would help “streamline” government. But the department had offered these accounts since 1911.
Another reason the USPS said it opposed offering financial services is that they would bring in “a low return” of only 10 percent to 20 percent.
Low return it says? Most ordinary businesses would slobber such a profit margin. Besides the typical bank net income hovers around 18 percent, according to Investopedia.com http://www.investopedia.com/ask/answers/052515/what-average-profit-margin-company-banking-sector.asp
So the USPS isn’t even a good liar.
To be fair, the postal service did point out developing and implementing financial services would entail heavy
start-up costs and that it would probably take a long time before they showed any results.
This may well be true. But what the USPS so obviously lacks is any intention of helping people let alone good business sense at a time when it sorely needs both.
Interestingly, the USPS made this rebuttal at a time when public trust in banks and the financial industry is under increasing attack from political figures such as Sen. Elizabeth Warren (D-MA) and others. She was an early proponent of postal banking last year.
Maybe postal banking will emerge as an issue in the 2016 Presidential election.