05.31.15

Post Office Supporters Banking on Financial Services

The city's 57,000 square-foot historic downtown post office, officially off the U.S. Postal Service list of properties for sale, sits largely unused.

On Tuesday afternoon, with about a dozen service windows shuttered, 24 people waited for help from two postal clerks. The rear of the century-old building and the second story are deserted -- USPS has moved postal carriers, bulk mail services and the postmaster's office out of downtown.But a May 21 Postal Service inspector general report called "The Road Ahead for Postal Financial Services" has fueled local activists' hope that some form of postal banking that could generate an estimated $1.2 billion to $10 billion annual profit, depending on the financial products offered, will help stabilize the insolvent and under-resourced postal system.The USPS bottom line has been hammered by email and by the 2006 congressional mandate requiring the post office to pay 75 years of retiree health benefits in 10 years at a cost of about $5.5 billion annually.The postal service has responded by selling off properties, cutting its workforce and consolidating facilities.Local activist Sharon Maldonado with Citizens to Save the Berkeley Post Office said postal banking would be a positive step toward re-establishing the fiscal health of USPS."Taking in $1.1 billion a year would mean the post office would have absolutely no reason to sell our historic post offices," Maldonado said, adding that while the report is a recommendation and not a mandate, it amplifies calls from postal unions and notables such as Sen. Elizabeth Warren, D-Mass., and consumer advocate Ralph Nader to expand postal banking functions.

J.P. Massar of Berkeley Post Office Defenders echoed the report's concern for the 68 million people outside the mainstream banking system who pay usurious fees to cash checks and take out loans.

While the report does not recommend in the initial phases that USPS offer either postal savings accounts -- which it did between 1911 and 1967 -- or small loans, Massar said both should be part of a longer-term goal.

In an email to this newspaper Rep. Barbara Lee, D-Oakland, shared her support.

"Far too often underserved communities fall into financial traps set by payday lenders and check cashing services that rob them of their hard-earned money," Lee wrote. "As we look for new ways to provide individuals with safe, trusted and fair financial options, adding additional financial services to post offices is a good place to start."

The report says the simplest approach would be expanding existing financial services, particularly money orders. In 2014, USPS sold $21 billion worth of money orders, earning $165 million in profit. Expanding this service to include transferring funds electronically between post offices would likely require approval by the Postal Regulatory Commission, but not Congress, the report said.

This approach would include expanding the USPS international remittance function to serve additional countries, expanding its prepaid gift card and check cashing functions, and adding bill payment services and ATMs.

Another approach the report outlines is partnering with one or more private sector banks, credit unions or money-transfer companies to include issuance of small loans and savings accounts.

The report also looks at the possibility that the post office could become a licensed financial institution focused on the financially underserved. While local activists laud this goal, the report doesn't recommend it.

"As a bank, the Postal Service could take customer deposits and use them to fund loans, giving it maximum ability to affect financial inclusion," the report states, noting, however, "getting a new bank charter might require many years of arduous effort to overcome political, industry, and regulatory obstacles (and require the Postal Service to) retrofit offices, hire significant financial expertise, build internal systems on a massive branch network, raise billions of dollars in capital, and bring in a staff of compliance managers."

The report is now in USPS hands.

"It is the Postal Service itself -- along with its governors, regulator, and other key stakeholders -- that must decide whether and how to expand its financial services offerings," the report says.

Toni DeLancey, USPS senior public relations manager, emailed this newspaper saying the service is reviewing the report.

To read this article in its original format, go here.