Republican senators are not fans of a U.S. Postal Service pilot program testing the viability of local post offices providing limited banking services to customers.
But New York Senator Kirsten Gillibrand advocated pushing the concept even further than the testing program.
Sen. Pat Toomey, a Republican from Pennsylvania and a senior minority member of the Senate Banking Committee, joined Sen. John Boozman, R-Ark., And a number of GOP colleagues in raising concerns about the program . In September, the USPS quietly launched the pilot program in four cities to gauge interest – the Bronx, Baltimore, Washington, DC, and Falls Church, Virginia.
In a letter to Postmaster General Louis DeJoy, senators questioned the legal authority of the USPS to implement a banking program unrelated to its mission to provide “reliable, affordable and universal postal service.” They note that the Postal Service launched the program without notifying Congress.
When the pilot program reports first became public in October, Ranker Toomey immediately raised his concerns, saying in a statement:
“It would take very hard work to come up with a worse idea than to see the government become a national bank run by the post,” he said. “Even though the US Postal Service was the most capable, professional, and well-managed organization on the planet, it shouldn’t be in the banking industry.
“We have banks,” Toomey continued. “The idea that the government is going to do a better job is just laughable.”
As Senators argue in their letter to DeJoy, the pilot program exceeds the legal authority of the USPS and does not meet relevant regulations and procedural requirements. They argue that the “ill-advised” pilot project could be used as a step towards nationalizing the US banking system, as proposed by President Joe Biden’s candidate for currency comptroller Saule Omarova.
“The ill-advised expansion of the postal service into consumer financial services raises the troubling possibility of government-run banking in the future,” the senators’ letter reads. “This suggestion is not just theoretical; a recent legislative proposal would have authorized the Federal Reserve to establish retail bank accounts accessible through the postal service. “
Senators argue that “the drastic expansion of the role of government in the provision of financial services is equally unnecessary and misguided.”
As part of the pilot program, customers can cash paychecks or business checks up to $ 500, turning them into Visa gift cards that can be used to purchase goods or withdraw cash at an ATM .
DeJoy, a person appointed by former President Donald Trump who is working to cut billions in USPS debt and improve efficiency, said the goal was to provide another option for Americans who do not use or have access to a bank for transactions.
Those without a bank account, advocates argue, often use payday loans or check cashing services to convert their paychecks to cash, which can lead to high fees. Postal banking services are also popular with immigrants, whose home countries often offer similar services within their postal systems.
Gillibrand, DN.Y., is an advocate for postal banking, saying it could generate much-needed revenue (up to $ 9 billion a year) for the Postal Service. In October, she praised the latest pilot, but noted that the Postal Banking Act she proposed in 2020 with Sen. Bernie Sanders, I-Vt., Would be more expansive, offering checking accounts and low-cost savings, ATMs, mobile banking and even low-interest loans.
Toomey and his GOP colleagues, in their letter to DeJoy, suggest that finding products and services unrelated to the Postal Service’s mission will distract attention and resources from the core function of mail delivery. ‘
“Historically, the postal service has failed to efficiently deliver financial services and compete with private sector innovation,” their letter states, noting that between 2007 and 19, the postal service lost more than $ 75 billion. dollars.
“Since these losses occurred over a period of time when the Postal Service focused exclusively on mail delivery, it would be unwise to shift attention and resources to an area in which the agency lacks experience. . “