Postal banking is harmful and unnecessary – InsideSources
October 4, three days after the U.S. Postal Service implemented degraded standards for first class mail, ensuring delivery will be slower than in the 1970s, she announced that she was embarking on a new activity: check cashing. The experimental service takes place in four cities: Washington, Baltimore, the Bronx and Falls Church, Virginia.
USPS has 188 billion dollars of unpaid debts and long-term liabilities, chronic annual losses of around $ 9 billion and a default of more than $ 45 billion in pension and health care contributions since 2011. Yet it flirts with diving – yes, wait – banking.
The main US progressives – Senators Bernie Sanders and Kirsten Gillibrand, as well as Representative Alexandria Ocasio-Cortez, are pushing hard enough for postal banking. Across the country’s more than 30,000 post offices, they want to deliver sprawling new government programs.
The central argument for postal banking is that millions of Americans are unbanked and exploited by payday loan companies and related businesses that charge high fees for check cashing and other services. . Unbanked means not having a checking or savings account at a bank or credit union.
While all exploitation of the poor is despicable, the numbers just don’t show that being unbanked is a widespread crisis, or that the USPS getting into this business is the best way to address the issue under -jacent.
a Report of October 19, 2020 by the Federal Deposit Insurance Corporation (FDIC) found that 5.4% of U.S. households (roughly 7.1 million households) were unbanked. This is the lowest level since the start of these studies, with a significant drop from 8.2% in 2011.
The FDIC study found that 56.2% of unbanked people were not at all interested in having a bank account, while only 24.8% were very or somewhat interested in a bank account.
And the unbanked have profitable options. For example, Walmart charges a maximum fee of $ 4 for checks up to $ 1,000, with funds put on a card, and cashed up to three checks per day. Under The USPS Pilot Program, he charges $ 5.95 to cash checks up to only $ 500 and places the funds on a card.
The mission and purpose of the USPS for the past 245 years has been to deliver the mail. It is the only entity that can perform this essential public service. Even in the Internet age, mail remains important, with 50 billion coins of first class mail sent annually. Still, the delivery standard for 39% of first-class mail has been extended by at least one day, effective October 1.
A critical lesson from the USPS over the past 15 years is that when it strays from its unique public and historic duty, mail delivery suffers. This is confirmed by The intense focus of the USPS on the increase in parcel delivery over the past 15 years, a competitive product for which customers have many alternatives.
Today, packages only represent 6 percent of total volume, but the focus on growing that business has resulted in a reduction in mail standards twice since 2014 and has contributed to the financial difficulties of the USPS.
Postal banking is much further removed from the USPS ‘core business of managing logistics and delivering mail.
There will soon be aggressive pressure for the USPS to open savings accounts. Not far behind will be applications for low interest credit cards, mortgages and auto loans. The goal of the progressives is to make the USPS a gigantic government lender and change the bank as we know it.
This raises many questions. Will USPS offer Venmo-like payment options? Accept Bitcoin for payment? How much information about depositors and customers could be stolen by hackers?
Banking technology is evolving rapidly and is essential to banking services today. USPS does not have the funds to become a full scale banking business. And taxpayers shouldn’t foot the bill for this experience or be the safety net of the USPS ‘financial services losses.
A US Treasury Department in 2018 USPS task force report He is right when he said: “E
USPS falters in its critical mission: timely mail delivery. Postal banking is diverting attention from this mission and will create even more staggering financial losses for the USPS while doing little or no good.