GOP Senators: Postal Banking is Ill-Advised and Maybe Illegal

A postal banking pilot program being run by the U.S. Postal Service is a bad idea, is not needed, and may violate federal law, 19 Republican senators wrote in a letter to Postmaster General Louis DeJoy on Monday.

“This radical expansion of the government’s role in providing financial services is equally unnecessary and ill-advised,” the senators, including Senate Banking Committee ranking Republican Pat Toomey of Pennsylvania, wrote.

The Postal Service rolled out a pilot program at USPS retail locations on Sept. 13 in the Washington, DC; Falls Church, VA; Baltimore, MD; and Bronx, NY, areas. Customers in these locations can cash a check to purchase a single-use gift card for up to $500. Checks larger than that will not be accepted, and no cash will be disbursed.

Many Democrats have been pushing the idea of postal banking as a way to provide financial services to the unbanked. Credit union trade groups have said the institutions they represent could provide those services if field of membership rules were adjusted by Congress.

In their letter, the Republican senators said that the banking pilot program may waste taxpayer resources without providing any commensurate benefit.

“We are concerned that the pilot program exceeds the Postal Service’s legal authority and fails to comply with relevant regulations and procedural requirements,” the senators wrote.

They said that the Postal Accountability and Enhancement Act generally prohibits the Postal Service from providing non-postal services and requires the Postal Regulatory Commission to review any non-postal services that might be allowed. “This pilot program appears to fall outside those statutory boundaries, and the Postal Service’s lack of transparency or consultation with lawmakers about the program heightens that concern,” they wrote.

The senators’ letter follows a similar letter written last month by House Financial Services Committee ranking Republican Patrick McHenry of North Carolina and House Oversight and Reform Committee ranking Republican James Comer of Kentucky.

A spokesperson for the Oversight and Reform committee Republicans said Monday that DeJoy had briefed Comer on the pilot program. “While [DeJoy] said the pilot program is ‘small potatoes,’ Ranking Member Comer still has concerns about it and will continue to monitor it closely and has requested additional information,” the spokesperson said.

Related:

House GOP Demands Info About ‘Secret’ Postal Banking Pilot

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