By Bill McAllister, Washington Correspondent
A May 21 report by the United States Postal Service Inspector General has reignited the question of whether the nation’s post offices should offer banking services.
Sen. Elizabeth Warren, D-Mass., has generated a lot of publicity for the idea in recent months, arguing that the USPS should become a help to the millions of people who don’t have traditional banking services. Plus, she says, this could be a good way for the financially troubled Postal Service to add much needed revenues.
Now David Williams, the inspector general, has added his support to the idea, predicting it could add $1.1 billion a year in revenues in just five years.
“This estimate reflects only a fraction of the potential revenue the Postal Service could garner from financial services if it obtained authority to offer a broader range of products,” his latest report states.
But the nation’s bankers, who have considerable clout on Capitol Hill, are telling Congress “no way.” And in no uncertain terms.
“The idea of trying to salvage a floundering operation by venturing into a new business with inherent risk and for which the Postal Service has no qualifications or expertise defies logic, reason and prudence,” said Camden R. Fine, president of the Independent Community Bankers of America.
Calling Williams' idea “a disaster waiting to happen,” Fine said in a May 22 statement that postal banking is “the last thing we need.”
Williams’ latest report, titled “The Road Ahead for Postal Financial Services,” argues that the Postal Service already has a big footprint on financial services.
The Postal Service is “the largest single provider of paper money orders in the United States, which are by far the most widely used alternative financial service.”
Foreign posts in industrialized countries typically make 14.5 percent of the revenues from financial services, the IG argues.
For the United States that could amount to $10 billion in added revenues, the report says.
“With the right focus and execution, there should be no reason why the Postal Service could not achieve normal financial returns or become the world’s leading post in providing financial services,” it says.
Postal unions have long supported a return to banking services in the nation’s post offices. Said American Postal Workers Union President Mark Dimondstein: “It’s a no-brainer.”
“We look forward to the day when people can get their checks cashed by their trusted neighborhood window clerk,” Dimondtein said in a statement.
A website called the Campaign for Postal Banking, backed by the major postal unions and other public interest groups, notes that from 1911 to 1966 postal offices offered postal savings accounts “guaranteed through the full faith and credit of the United States” to millions of people.
By 1934, those accounts rose to $1.2 billion, or about 10 percent of the entire commercial banking system, the website says.
They sold the well-known “Defense Saving Stamps” to help fund World War II, totaling about $8 billion during the war years.
Congress closed the postal banks in 1966, noting the rise of federally insured savings programs that paid higher interest rates.
Aside from Warren, the idea of postal banking has attracted relatively few backers on Capitol Hill. The opposition of the bankers seems likely to put postal banking proponents on the defensive.
Fine has charged that Williams should stop “playing the role of business consultant to USPS and instead focus on evaluating and improving USPS’ existing program - which is the traditional role of an inspector general.”
Still, the idea remains to get attention on the Washington talk shows.
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