Postal Banking Returns

Postal banking is back.

As policymakers battle over how to deal with the mounting losses facing the United States Postal Service, supporters of a plan to allow post offices to provide basic financial services are renewing their arguments that postal banking could help save the system.

“The post office would offer low-cost checking and savings accounts similar to those found at other banks, access to services like A.T.M.s and mobile banking and low-interest loans for families looking for a financial bridge to cover food or heating costs,” Sen. Kirsten Gillibrand (D-N.Y.) wrote in an op-ed in the New York Times last month.

Gillibrand followed up that op-ed last week with a telephone press conference that featured supporters of her plan.

But a recent Government Accountability Office report raised questions about whether the cost of equipping post offices to provide banking services outweighed the financial benefits.

Gillibrand and others have been pushing postal banking plans for several years. Sen Bernie Sanders (I-Vt.) said he favored the plan, as he campaigned for the Democratic presidential nomination this year.

Credit union trade groups have been outspoken in their opposition to any postal banking plan, arguing that if Congress amended federal law to allow credit unions to serve underserved consumers, they could better serve those people.

Two members of the NCUA board, Chairman Rodney Hood and board member Todd Harper have in the past two weeks sent letters to Congress supporting the credit union trade groups’ position to expand credit union services to underserved areas.

The Postal Service already faced huge losses even before the coronavirus crisis. Those losses have mounted and the newly formed Postal Preservation Caucus last week called on Congress to immediately provide $25 billion for the Postal Service.

President Trump has said he would oppose additional help for the Postal Service unless it raised rates. On Wednesday, Trump said he will appoint Louis DeJoy, owner of a consulting and real estate company, as the new Postmaster General. DeJoy is a longtime Republican fundraiser and has been leading the effort to raise money for the 2020 Republican National Convention.

In arguing for postal banking, Gillibrand pointed out that almost 10 million American households have no bank account and are forced to rely on “fringe” financial services providers, such as payday lenders.

But the GAO said that allowing post offices to provide banking services most likely would not improve the financial condition of the Postal Service. The GAO also noted that post offices would require extensive renovations before they could offer banking services.

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