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On Friday, two Republican members of the U.S. House of Representatives sent a letter to USPS Postmaster General Louis Dejoy to raise their concerns about the postal banking pilot project, which launched quietly last month.
House Oversight and Government Reform Committee Ranking Member James Comer (R-Ky.) and House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) said that Dejoy "has neglected to share information about this pilot program" during his testimony before their committees or to Congress.
The USPS began a check-cashing pilot program on Sept. 13 at four urban post offices.
In their letter to Dejoy, the lawmakers wrote, "During the lengthy negotiations, you never once raised the Postal Service's intention to expand into banking services. The Postal Service's 60-page reform plan, called 'Delivering for America: Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence,' similarly omits any reference to postal banking. Again, on February 24, 2021, when you testified before the Committee at a hearing entitled 'Legislative Proposals to Put the Postal Service on Sustainable Financial Footing,' you never mentioned the prospect that the Postal Service might veer into the financial services industry."
Reps. Comer and McHenry claimed that the USPS has no statutory authority to expand the four-city pilot project without approval from Congress. The two lawmakers raised privacy and financial mismanagement as two reasons they believe the USPS venturing into banking could backfire.
The lawmakers wrote, "Last year, the Postal Service incurred a net loss of $9.2 billion. This is consistent with a trend of losses that aggregate to more than $87 billion over the past 14 fiscal years. Beyond the Postal Service's balance sheet — which is in and of itself disqualifying for an expansion into financial services — there are other reasons to be concerned. For instance, a massive cybersecurity breach exposed Social Security numbers and other sensitive data for millions of USPS customers and employees. The Office of Inspector General found USPS operates with insufficient controls to combat money laundering schemes. It is unclear why the Postal Service believes itself to be ready for the added responsibility of offering expanded financial services."
According to the few details available about the pilot program, the program appears to be small in scope and is isolated to four USPS locations in Falls Church, Va., Baltimore, the Bronx, N.Y., and Washington, D.C.
USPS customers can use payroll or business checks to purchase single-use gift cards worth up to $500. Customers can also pay bills, and get access to ATMs as well as money orders and wire transfers.
After the discovery of the pilot project, nearly a month after its launch, NAFCU President/CEO Dan Berger said, "This program stretches the bounds of the postal service's statutory authority and allows the underfunded and understaffed USPS to unfairly compete with credit unions who are already meeting the needs of low- to moderate-income individuals."
Berger added, "To better help the underbanked and underserved, Congress should instead allow all credit unions, as community-based financial institutions that prioritize consumers over generating profits, the ability to add underserved areas to their fields of memberships. The USPS already has its hands full with its current mission and lacks the bandwidth needed to run such a large and complex operation."
Also, the American Bankers Association released a statement calling the USPS "ill-suited to manage" the project and any full-on postal banking efforts.
"The solution to high retail check-cashing fees is a banking relationship, not a government-subsidized service through the post office," the ABA commented.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
