Mark Dimondstein, president of the American Postal Workers Union, a public sector union representing more than 200,000 current and former United States Postal Service (USPS) employees, is calling on Postmaster General Megan Brennan to allow the quasi-government agency to enter the banking industry.
In addition to its primary services of delivering mail, USPS provides some financial services, such as domestic and international paper money orders, international remittances, open- and closed-loop gift cards, and limited check cashing. USPS currently spends $5.5 billion per year more than it collects and is defaulting on pension payments to retirees.
Dimondstein’s campaign to allow USPS to expand its services is echoed by proposals from U.S. Sen. Bernie Sanders (I-VT), a candidate running to be the Democratic Party’s presidential nominee.
Mark Thornton, a senior fellow with the Mises Institute, says USPS should first master handling its own finances before adding additional services.
“There is much more the USPS can do to reduce costs, such as reducing the number of days they deliver mail,” Thornton said. “For example, some customers would get mail delivered on Mondays, Wednesdays, and Fridays, while the others would get it on Tuesday, Thursday, and Saturdays, and post box customers would get deliveries six days a week, thus allowing for a small increase in the post box rental fees.”
Thornton says postal banking would be an inefficient use of taxpayers’ money.
“I don’t see a big market for another banking system,” Thornton said. “All the good customers have already been taken, and demographically the market is moving away from the post office model and … brick and mortar banks. The USPS would be left with customers who would not be very profitable. It might help some people who do not have access to banks, but it would not solve the USPS’ problem.”
Kevin Kosar, a senior fellow with the R Street Institute, says postal banking is an outdated idea, better left in the history books.
“The postal banking system was established back when private banks did not insure deposits,” Kosar said. “People put their money in the postal bank because it was safe. Congress created the Federal Deposit Insurance Corporation in 1933, and it guarantees customer deposits to private banks. By the time that Congress closed the postal bank, few Americans were using it.”
‘Right Its Financial Ship’
Kosar says USPS should face facts and address the real problems the agency faces.
“The agency is losing money because there is less demand for paper mail,” Kosar said. “We should accept this basic truth and let USPS take steps to cut costs so that it can right its financial ship. What we should not do is to invent new jobs for [USPS] to do, like banking, in the hopes that these ventures will provide profits.”
Gabrielle Cintorino ([email protected]) writes from Nashville, Tennessee.