Postal Commission Says It Did Not Approve Banking Pilot

The United States Postal Service began a controversial banking pilot program without the knowledge of the commission that is supposed to oversee the service, according to newly filed documents with the Postal Regulatory Commission.

In a formal request for information late last week the commission posed a series of questions that makes it clear that commission officials were unaware of the pilot program when it was started.

The commission is asking the Postal Service why it did not seek commission approval before beginning the program.

The Postal Service rolled out the 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.

The Postal Service did not make a formal announcement of the pilot program, but officials said it was part of the service’s ten-year improvement plan.

The commission wants to know if the Postal Service conducted any market research that demonstrated a need or existing customer demand for financial services. The commission also wants to know whether postal officials have plans to expand the service and what methods they will use to evaluate whether it is successful. Commission members also want to know how often a person can cash a check and receive a gift card.

They also asked Postal Service officials what, if any, training employees received to operate the program and the cost, revenue and volume data for the program.

The questions could be a sign of tension between Postmaster General Louis DeJoy, a controversial Trump Administration nominee active in Republican politics, and Michael Kubayanda, President Biden’s choice to chair the panel.

Postal banking has been a controversial issue for decades. Congressional Democrats have sponsored legislation that would allow the Postal Service to provide a wide range of financial services as a way to reach people who do not have easy access to banks or credit unions. Republicans traditionally have opposed them, and GOP members of Congress have said they do not like the pilot program.

In their version of the FY22 Financial Services appropriations bill, House Democrats included a postal banking pilot program. That program is not related to the Postal Service pilot, since the final spending bill has not been enacted.

Banking trade groups, including credit union trade groups also have opposed postal banking. Credit union trade groups contend that they could serve those people who do not have easy access to financial services if Congress loosened field of membership requirements.

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