[Politics and special interests, not economic constraints, are
what’s keeping the U.S. Postal Service from becoming a hub for
affordable banking and other valuable community services in the 21st
century. ] [[link removed]]

THE POST OFFICE AT A CROSSROADS  
[[link removed]]

 

Monique Morrissey
November 16, 2021
Economic Policy Institute - Working Economics Blog
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
* [[link removed]]

_ Politics and special interests, not economic constraints, are
what’s keeping the U.S. Postal Service from becoming a hub for
affordable banking and other valuable community services in the 21st
century. _

,

 

USPS has a public service mandate to provide a similar level of
service to communities across the country regardless of local economic
conditions. In addition to daily mail delivery to far-flung locations,
the Postal Service maintains post offices even in low-income urban
neighborhoods and small towns that lack other basic services. The
Postal Service is able to fulfill its mission while keeping postage
rates low due to economies of scale.

Once the fixed costs of post offices and delivery are covered, the
additional cost of new services is often minimal. If it weren’t
prevented from doing so, the Postal Service could take advantage of
underused capacity and build on Americans’ trust in the Postal
Service to offer new services to the public while bringing needed
revenue to the agency. But first we need to jettison a regulatory
framework that protects private-sector rivals at the expense of
consumers.

_[RELATED: THE WAR AGAINST THE POSTAL SERVICE: POSTAL SERVICES SHOULD
BE EXPANDED FOR THE PUBLIC GOOD, NOT DIMINISHED BY SPECIAL INTERESTS
[[link removed]]]_

The most talked-about expansion idea is a revival of postal banking,
though advocates
[[link removed]]
have proposed
[[link removed]]
everything from in-home delivery of perishable groceries to senior
wellness checks. Until postal banking was discontinued in 1967, the
Post Office earned a modest fee for administering basic savings
accounts, partnering with private banks that paid interest to account
holders in exchange for loanable funds. As proposed
[[link removed]]
by Senator Sherrod Brown (D-Ohio), an updated postal banking system
could be paired with broader government efforts to modernize the
monetary system.

While a growing number of Americans have stopped using cash in favor
of debit or credit cards and online bill paying, many others face
barriers to accessing a modern payments system. These barriers include
bank branch “deserts
[[link removed]],”
minimum balance requirements
[[link removed]],
and privacy concerns
[[link removed]].
As a result, low-income Americans in particular—disproportionately
[[link removed]]
people of color—often end up paying high fees simply to access and
safeguard their own funds and conduct simple financial transactions,
with many remaining entirely “unbanked.” The average person using
paycheck lenders and other alternative financial services pays an
estimated $3,000
[[link removed]]
in fees and interest annually, but even households with bank accounts
often face high fees for basic services.

Maintaining a secure monetary system
[[link removed]]
that serves as a store of value, a system of accounts, and a means of
exchange is a quintessential government service, as basic as providing
for defense against military attack. But the government has fallen
down on the job while the private sector has encroached
[[link removed]]—most
visibly with cryptocurrencies but also by charging high fees for ATM,
check cashing, and similar services. These service fees—and
“gotcha” charges like overdraft fees—are an increasing share
[[link removed]]
of bank revenues and contribute to underserved communities’ distrust
of banks
[[link removed]].

Many fees and penalties could be avoided with fast and secure
electronic payments and the ability to verify the availability of
funds. Big banks already have a private system in place for real-time
transactions among themselves, but community banks and households are
waiting for the Federal Reserve to set up a public system, a process
that has been maddeningly slow
[[link removed]].
Once this system is in place, the next step is creating secure
accounts for anyone who wants them, such as the no-fee accounts
accessible via the Postal Service and community banks that Senator
Brown proposes.

As with other neglected infrastructure, delayed investment in a
digital payments system is costly, as shown by recent challenges
[[link removed]]
in getting COVID relief payments to many households. Aside from
contributing to households’ financial stress, such delays can affect
the timing and efficacy of stimulus efforts. Other government
transfers—such as the child tax credit
[[link removed]]—are
also better handled through periodic electronic payments than paper
checks or annual tax filings.

A postal banking bill
[[link removed]]
co-sponsored by Senators Kirsten Gillibrand (D-New York) and Bernie
Sanders (I-Vermont) is more narrowly focused on the Postal Service
than Senator Brown’s bill and includes small loans to compete with
high-cost lenders. This would require congressional action because a
2006 law limits the Postal Service to financial and other services
similar to those it already offers. To bypass this restriction and
address any concerns about the Postal Service’s loan underwriting
ability, some advocates of postal banking, including early proponent
Senator Elizabeth Warren (D-Massachusetts) and former USPS Inspector
General David Williams
[[link removed]],
have suggested that the Postal Service partner with credit unions and
community banks who could offer competitively priced loans and other
banking services in more communities if they didn’t bear the cost of
opening new branches. As Warren
[[link removed]]
put it, “This is just an opportunity for the Post Office to use its
space and to use its employees more efficiently to bring needed
services to more Americans.”

The Postal Service recently took baby steps in the direction of postal
banking, converting payroll and other business checks to one-time-use
debit cards at four locations in a pilot
[[link removed]]
program launched in September. While not a substitute for a bank
account, low-cost check cashing can help undocumented immigrants,
people without fixed addresses, and others wary of or prevented from
opening bank accounts avoid high-fee outlets. Because the Postal
Service already offers
[[link removed]]
limited government check cashing and sells generic gift cards, the
pilot project is an extension of existing services and doesn’t
require congressional approval to expand to other branches.

In its current form, however, postal banking seems likely to flop.
This is not only because there are too few locations and services
offered to capture the public’s attention, but because the terms
aren’t even competitive with Walmart’s
[[link removed]],
which has a higher check limit and lower fee.

The union representing postal clerks is working to fix this, but there
are legal, regulatory, and institutional barriers to expanding
financial services beyond check cashing, bill payment, wire transfers,
and ATMs. Even if Congress undoes the provisions of the 2006 act that
limit the menu of services offered by the Postal Service, the Postal
Regulatory Commission needs to sign off on services and pricing, and
it tends to interpret its mandate as shielding USPS competitors
[[link removed]]
from what it deems unfair competition rather than focusing on what’s
best for consumers.

Meanwhile, scandal-plagued
[[link removed]]
Postmaster General Louis DeJoy remains at the helm, intent on
shrinking the Postal Service by outsourcing work
[[link removed]]
and cutting services
[[link removed]],
to the benefit of his former employer and other special interests.
President Biden, who supports postal banking
[[link removed]],
has an opportunity to nominate members to the Postal Service Board of
Governors before December who could form a majority to fire DeJoy. But
he hasn’t announced his picks for the positions, and incumbent Ron
Bloom
[[link removed]],
an unabashed supporter of DeJoy and his controversial service
slowdowns, could well be reappointed.

Postal banking is closer to becoming a reality than it has been in
half a century. Notwithstanding DeJoy’s gross mismanagement, the
Postal Service remains one of the most popular
[[link removed]]
and trusted institutions in America, praised equally by Republicans
and Democrats. We should build on this trust—and on the Post
Office’s underused capacity—to provide more services Americans
need and want. It’s worth the time of Congress and the
administration to think hard about how to remove obstacles to this
effort.

===

*
[[link removed]]
*
[[link removed]]
*
* [[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web [[link removed]]
Submit via email
Frequently asked questions [[link removed]]
Manage subscription [[link removed]]
Visit xxxxxx.org [[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]