Postal Overhaul Proposal Does Not Address Banking Controversy

The Postal Service overhaul plan released by Postmaster General Louis DeJoy Tuesday did not include a banking proposal, but it did include vague language about expanded retail services that could be offered at post offices.

The plan stated that the federal government should modernize post offices to “enable expanded digital, small- and medium-sized business and government services.”

And it stated that the Postal Service should offer “comprehensive small business services to bridge local retailers to local buyers, through offerings like pop-up kiosks that serve as a second storefront to elevate their brand.”

Continuing the generalities, the plan stated that the Postal Service should leverage its brand to expand identity services such as passport services, fingerprint capture, biometric data capture, and in-person proofing and notary services.

“We will become the storefront for government services and generate new revenue and additional foot traffic into our retail facilities,” the proposal stated. “We will become a one-stop shop for a wide range of government services.”

DeJoy Tuesday proposed a 10-year plan to avoid a government bailout of the beleaguered service, which he estimated could cost as much as $160 billion. However, the plan included cuts in services, such as increasing the amount of time it takes for First Class mail to reach its destination. Congress is likely to find that unacceptable.

And Democrats on Capitol Hill have made it clear that they believe DeJoy should be fired following the debacle that slowed mail-in ballots during the 2020 election.

As Congress debates how to help the Postal Service, postal banking is likely to be included in the mix, particularly if President Biden’s leading candidate for the Comptroller of the Currency gets the job.

Sources in the financial community have said that Mehrsa Baradaran, a law professor at the University of California, Irvine, is likely to be nominated for the job.

She is an outspoken advocate of allowing the Postal Service to help provide financial services to people who are unbanked.

“Postal banking is not just a good idea to replace predatory fringe lenders and provide low-cost, accessible financial services that can help lift people out of poverty, it is also central to saving a vital part of our nation’s infrastructure,” she wrote in a brief issued by the Justice Collaborative Institute in July 2020.

More recently, the American Civil Liberties Union has been circulating a petition endorsing postal banking.

Credit union trade groups have been longtime opponents of postal banking.

Earlier this month, NAFCU Vice President of Legislative Affairs Brad Thaler renewed that opposition in a letter to the House Financial Services Appropriations Subcommittee. That panel last year included a postal banking pilot program in its version of the annual appropriations bill.

“The USPS was established to provide letter, parcel and package delivery services to the country, and an expanded foray into financial services would be both beyond these powers and add a responsibility in which the USPS has no expertise,” Thaler wrote.

He added that if lawmakers want to expand access to financial services, they could allow all credit unions to add underserved communities to their field of membership.