Commentary: Postal banking is harmful and unnecessary | Remark

On October 4, three days after the U.S. Postal Service implemented degraded standards for first-class mail, ensuring delivery will be slower than in the 1970s, it announced it was embarking on a new activity: check cashing. The Experimental Service is held in Washington, Baltimore, at the Church in Bronx and Falls, Virginia.

The Postal Service has $ 188 billion in unpaid debts and long-term liabilities, chronic annual losses of around $ 9 billion, and has missed more than $ 45 billion in pension and health care contributions since 2011 Still, he flirts with diving – yes, wait – banking.

The main American progressives – American senses Bernie Sanders and Kirsten Gillibrand, as well as United States representative Alexandria Ocasio-Cortez, are pushing hard enough for postal banking. Across the country’s more than 30,000 post offices, they want to deliver sprawling new government programs.

The central argument for postal banking is that millions of Americans are unbanked and exploited by payday loan companies and related businesses that charge high fees for check cashing and other services. . Unbanked means not having a checking or savings account with a bank or credit union.

While all exploitation of the poor is despicable, the numbers just don’t show that being unbanked is a widespread crisis, or that bringing the post into that business is the best way to address the underlying problem.

An October 2020 report from the Federal Deposit Insurance Corporation found that 5% of U.S. households (roughly 7.1 million households) were unbanked. This is the lowest level since the start of these studies, with a significant drop from 8% in 2011.

The FDIC study found that 56% of unbanked people were not at all interested in having a bank account, while only 25% were very or somewhat interested in a bank account.

And the unbanked have profitable options. For example, Walmart charges a maximum fee of $ 4 for checks up to $ 1,000, with funds put on a card, and up to three checks per day cashed. The post office pilot program charges $ 5.95 to cash checks up to $ 500 only and places the funds on a card.

The mission and purpose of the postal service for the past 245 years has been to deliver the mail. It is the only entity that can provide this essential public service. Even in the Internet age, mail remains important, with 50 billion first-class mails sent each year. Still, the delivery standard for 39% of first-class mail has been extended by at least one day from October 1.

A crucial lesson from the Post over the past 15 years is that when it strays from its unique public and historic duty, mail delivery suffers. This is corroborated by USPS ‘focus on increasing parcel delivery over the past 15 years, a competitive product for which customers have many alternatives.

Today, parcels represent only 6% of the total volume, but the focus on growing this business has resulted in a double reduction in mail standards since 2014 and contributed to the financial difficulties of the postal service.

The postal bank is much further from the main mission of the post of logistics management and mail delivery.

There will soon be aggressive pressure for the Post to open savings accounts. Not far behind will be applications for low interest credit cards, mortgages and auto loans. The goal of the progressives is to make the postal service a gigantic government lender and to change banking as we know it.

Banking technology is evolving rapidly and is essential to banking service. The Post does not have the funds to develop into a large-scale banking business. And taxpayers shouldn’t foot the bill for this experience or be the safety net for its lost financial services.

A 2018 US Treasury Department Task Force report on the Postal Service was correct when it said: “Given the USPS ‘narrow expertise and capital limitations, expansion into sectors where the USPS has no comparative advantage or where a balance sheet risk could arise, such as as postal banking, should not be sued.

The post office is faltering in its critical mission: timely mail delivery. Postal banking services distract from this mission and will create even more staggering financial losses while doing little or no good.

Paul Steidler is a senior research fellow at the Lexington Institute, a public policy think tank in Arlington, Virginia. He wrote this for InsideSources.com.

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