|Video: Mr. Tree tells Erik Cagle "No" to USPS banking.|
(The video, an interview with Erik Cagle of Printing Impressions, is a real hoot for lovers of bad puns, even though it addresses the serious topic of the USPS's future.)
The idea of having the USPS provide more financial services than just selling money orders has noble intentions: Many poor people and rural residents have inadequate access to banks. Sen. Elizabeth Warren (D-Mass.) says more than one-quarter of U.S households are "unbanked" or "underbanked" -- that is, at least partially reliant on expensive nonbank financial services like payday lending and check cashing.
But the proponents have avoided answering several key questions:
- Who would pay for the upfront investment in equipment, technology, and employee training? Because of Congressional accounting games, the Postal Service can barely keep its head above water and is unable to borrow any money. As I noted in the video, it operates thousands of inefficient delivery vehicles that are well past their intended life and have "an annoying habit of bursting into flames without warning. The USPS is slowly replacing those. It has no access to additional capital.
- What does the Postal Service know about running a bank? The regulations, the security issues, and the information systems to run a nationwide bank are daunting. And USPS salary caps would prevent it from hiring the kind of people who would know how to create and run such a bank.
- Why do you think the USPS would be able to thrive where private enterprise fears to tread? If the only financial institutions that can make a go of it in poor areas charge usurious interest rates, why do you think the Postal Service could thrive by making lower-interest loans? The Postal Service's only competitive advantage is that it already has buildings and staff in underbanked locales. But 21st Century financial institutions are built more on bytes than bricks.
- Who will pay if the USPS's banking efforts go sour? There's only one answers, which the proponents won't admit: Mailers. I haven't heard anyone propose government appropriations to help the Postal Service's banking efforts or federal guarantees to cover it for unexpected losses. The only way the USPS could sustain losses, or even make significant investments, in a banking venture would be to hit its customers with another "exigent" surcharge. If Congress wants a program to help the underbanked, it should have the cojones to appropriate the money -- not pay for it with a back-door tax on Forever Stamps and mail-dependent industries.