By Thomas G. Wolfe, J.D.
The U.S Postal Service Office of Inspector General’s May 2015 report examining the “different roads” the Postal Service could likely take for expanding financial services has elicited further debate on the topic. For example, while Ranking Member of the House Committee on Oversight and Government Reform, Elijah Cummings (D-Md), praised the OIG’s report, the Independent Community Bankers of America (ICBA) expressed serious concerns about the USPS venturing deeper into the consumer financial services marketplace.
By way of background, in its May 21, 2015, report entitled “The Road Ahead for Postal Financial Services”, the OIG for the USPS concludes that, with the “right execution and marketing, expanded financial services would benefit the underserved and shore up the strength of the postal network, helping to ensure that the Postal Service is ready to meet the needs of all citizens in the 21st century.” Along these lines, the report states that a “logical first step could be to revamp existing [financial] services to make them more appealing to consumers, then expand into adjacent products that could be allowable under current law.”
In commending the OIG’s recent report, Rep. Cummings remarked, “This White Paper makes clear that the Postal Service could generate new revenue by offering an expanded range of financial products and services that American consumers want.” Noting that “one in five American households are ‘under-banked’ and obtain financial services from alternative entities such as liquor stores and payday lenders,” Cummings maintained that the Postal Service should be given additional authority to offer financial products and services as part of “comprehensive postal reform this year.”
In stark contrast, the ICBA voiced its concern about the report. In a recent release, ICBA President and CEO Camden R. Fine emphasized that the ICBA “strongly disagrees with the assertion that the answer to the U.S. Postal Service’s growing operational, management and financial troubles is entering the banking industry.” Besides questioning the OIG’s role as a “business consultant” to the Postal Service, Fine maintained that the “Postal Service’s role in delivering the mail does not make it a good fit for handling credit or lending to consumers.”
In Fine’s view, the “idea of trying to salvage a floundering operation by venturing into a new business with inherent risks and for which the Postal Service has no qualifications or expertise defies logic, reason and prudence.”
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