GOP senators oppose postal banking idea | News


Republican senators are not fans of a US Postal Service pilot program testing the viability of local post offices providing limited banking services to customers.

But New York Senator Kirsten Gillibrand advocated taking the concept even further than the testing program.

Sen. Pat Toomey, a Republican of Pennsylvania and an upper minority member of the Senate Banking Committee, joined Sen. John Boozman, R-Ark., and a number of GOP colleagues to raise 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, Va.

In a letter to Postmaster General Louis DeJoy, the senators questioned the legal authority of the USPS to implement a banking program unrelated to its mission to provide “reliable, affordable, and universal mail service.” . They note that the Postal Service launched the program without notifying Congress.

When reports of the pilot program first became public in October, ranking member Toomey immediately raised concerns, saying in a statement:

“You would have to work very hard to come up with a worse idea than making the government a national bank run through the post office,” he said. “Even if the U.S. Postal Service were the most competent, professional, and best-run organization on the planet, it shouldn’t be in banking.

“We have banks,” Toomey continued. “The idea that the government is going to do a better job is just laughable.”

As the senators argue in their letter to DeJoy, the pilot program exceeds the legal authority of the USPS and fails to meet relevant regulations and procedural requirements. They argue the “misguided” pilot project could be used as a step toward nationalizing the US banking system, as proposed by President Joe Biden’s nominee for Comptroller of the Currency, Saule Omarova.

“The Postal Service’s misguided expansion into consumer financial services raises the troubling possibility of government-run banking in the future,” the senators’ letter said. “This suggestion is not merely theoretical; a recent legislative proposal would have authorized the Federal Reserve to establish retail bank accounts accessible through the Postal Service.

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The senators argue that “drastically expanding the role of government in the provision of financial services is equally unnecessary and misguided.”

Under the pilot program, customers can cash payrolls or business checks up to $500, turning them into Visa gift cards that can be used to purchase goods or withdraw cash from an ATM.

DeJoy, a former President Donald Trump appointee who is working to reduce USPS debt and improve efficiency, said the goal is to provide another option for Americans who don’t use not or do not have access to a bank for basic expenses. transactions.

Those without bank accounts, advocates say, often use payday loans or check cashing services to convert their paychecks into cash, which can result in high fees. Postal banking is 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 program, 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 getting into products and services unrelated to the Postal Service’s mission will divert attention and resources from the core mail delivery function. ‘

“Historically, the Postal Service has failed to effectively deliver financial services and compete with private sector innovation,” their letter says, noting that between 2007 and 2019, the Postal Service lost more than $75 billion. of dollars.

“Given that these losses occurred during a period when the Postal Service was exclusively focused on delivering mail, it would be unwise to shift attention and resources to an area in which the agency lacks experience.”


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