• Sat. Oct 1st, 2022

Post should stay out of the banking business: Ministry of Finance

A new report from the Trump administration on reforming the US postal service throws cold water on the idea of ​​a foray into banking.

The report, released Tuesday, reflects arguments that bankers often make against post banking, namely that the USPS is ill-equipped to handle the risks involved.

“Given the USPS’s narrow expertise and capital constraints, expansion into sectors where the USPS has no comparative advantage or where balance sheet risk may arise, such as post banking, should not be pursued,” the report said.

The debate on post banking started in 2014 when the Inspector General of the Postal Service launched the idea.

The proposal has been criticized by both the USPS and lenders with whom the postal service would have competed. “This is the worst idea since the Ford Edsel” said Cam Finewho was CEO of the Independent Community Bankers of America at the time.

However, post banking is backed by several Democratic senators considering presidential offers, including Elizabeth Warren of Massachusetts, Kirsten Gillibrand of New York and Sherrod Brown of Ohio, and the Vermont Independent Bernie Sanders, so it could become a more prominent political issue in the next few two years.

Proponents of the concept argue that the USPS, which operates more than 30,000 post offices, is well positioned to offer more affordable credit to millions of Americans who depend on payday loans. They also point out that banking services would provide a new source of income for the ailing postal service.

The USPS reported a net loss of $ 3.9 billion in fiscal 2018, its 12th year.NS Year with net losses.

In April, President Trump set up a task force to make recommendations on how to make the post office financially sustainable. The working group was chaired by Treasury Secretary Steven Mnuchin. This also included representatives from the Office for Administration and Budget and the Office for Personnel Management.

The Task Force’s 69-page report recommends that the Postal Service explore some new business opportunities, such as offering hunting and fishing licenses. The report also suggests that existing post offices should rent space to other retailers.

The American Bankers Association was among the groups that contributed to the report.

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