USPS Loses Nearly $2B in Q2, Could Banking Services Stop the Bleeding? (Aug. 12, 2014)
The U.S. Postal Service (USPS) on Aug. 11 posted a net loss of $2 billion for the quarter ended June 30, 2014, compared with a net loss of $740 million for the same period a year ago, increasing pressure on the beleaguered organization to find new sources of revenue.
The most recent quarterly loss—the 21st out of the last 23 quarters—could drive government officials and lawmakers to look seriously at new possible revenue streams, including a recently introduced bill that could open the financial services sector to the USPS. Rep. Cedrich Richmond, D-La., on July 24 introduced a bill in the U.S. House of Representatives that could enable USPS to offer checking accounts, interest-bearing savings accounts and international money transfers, either alone or in partnership with banks and credit unions. The bill, termed the “Providing Opportunities for Savings, Transactions and Lending Act,” also calls for creating a “Postal Card,” or debit card for postal banking customers to conduct transactions in-store, online and via mobile devices.
Richmond said the bill could benefit an estimated 68 million unbanked and underbanked consumers, citing their lack of access to affordable loans. “Allowing the Post Office to offer some basic financial services would save these households thousands of dollars every year, and put the USPS on more stable financial footing,” he said.
The USPS Office of Inspector General in January published a white paper, “Providing Non-Bank Financial Services for the Underserved,” outlining how the USPS could “complement” existing financial institutions’ offerings, “helping fill the gaps in their efforts to reach the underserved” by harnessing the ubiquitous reach of USPS offices nationwide. The report noted that financial services are a major source of revenue for postal operators in many nations around the world.
The American Bankers Association and the National Association of Federal Credit Unions voiced concern about the proposal, noting the competitive complications of creating a new entity, apparently endorsed by the U.S. government, that could engage in financial services without being subject to existing levels of regulation.
The bill moved to the House Oversight and Government Reform Committee for discussion.