Our Position

Postal Banking and Federal Reserve Accounts

Position

  • ICBA opposes the formation of new public banks or other types of public retail financial service providers, whether they are owned by states, municipalities, the United States Postal Service (USPS), or any other federal or quasi-federal instrumentality.
  • ICBA opposition extends to the creation of special purpose banks to service the cannabis industry or a National Infrastructure Bank.
  • Such banks would directly compete with community banks, diverting deposits from local communities and create undue taxpayer risk. Financial services are best provided in a competitive, private, and free marketplace that openly and efficiently benefits customers.
  • Community banks and other financial institutions continue to offer low-cost financial services to underserved communities to help them break from the debt cycle of payday lenders.

Background

Postal Banking. There has been a resurgence in interest among certain lawmakers in allowing the United States Postal Service (USPS) to offer retail banking services. In 2021, the USPS quietly launched an ICBA-opposed pilot to offer check cashing, bill paying, ATM access, and expanded money orders and wire transfers in Washington, DC; Falls Church, VA; Baltimore, MD; and the Bronx, NY. USPS reported that, across all locations, just six checks were cashed for a total value of $548.46, resulting in just over $35 in revenue for the cash-strapped USPS.

It would be a serious mistake for the USPS to enter a highly competitive, complex new industry with the potential to ruin itself and its core function and put American taxpayers at further risk. Effective banking management requires years if not decades to master.

FedAccounts. Proponents would make “FedAccounts” available to all citizens, residents, and nonfinancial businesses at taxpayers’ expense. These accounts would offer the same services as commercial bank accounts including the issuance of debit cards, ATM access, direct deposit and online bill pay services. They would also support internet and mobile banking.

These features put FedAccounts in direct competition with checking and savings accounts offered by community banks. Moreover, the possibility that such accounts could be used by the government to track an individual’s financial transactions creates serious privacy concerns.

The Fed has repeatedly said it is not suited to offer direct accounts to consumers and is not legally permitted to do so. For instance, proposals for no-fee FedAccounts would not provide for adequate cost recovery as required by the Monetary Control Act.

Staff Contacts

Aaron Stetter

Executive Vice President, Advocacy and Strategic Engagement

Washington, DC

Email

Twitter

Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC

Email

Postal Banking White Paper 2021

Postal Banking - A Flawed Proposal in Pursuit of a Worthy Goal - Part 1

Part one in a three part series, this installment outlines how the pursuit of postal banking would harm the already stressed primary function of the United States Postal Service, mail delivery.
Postal White Paper Summary

Postal Banking - A Flawed Proposal in Pursuit of a Worthy Goal - Part 2

Part two in a three part series, we argue that USPS simply does not possess the know-how to succeed at banking, that legislative mandates would undermine revenues, and that the agency would likely fail at the twin objectives of postal banking.
POSTAL BANKING A Flawed Proposal in Pursuit of a Worthy Goal—A Series

Postal Banking - A Flawed Proposal in Pursuit of a Worthy Goal - Part 3

Community bankers are committed to serving their communities, including unbanked populations. A community cannot thrive without inclusive access to the banking system. This concern is too important to entrust to an untested proposal.

ICBA to Senate: Oppose Postal Banking Amendments

Feb. 15, 2022

ICBA Press Release Banner 2020

Washington, D.C. (Feb. 15, 2022) — The Independent Community Bankers of America (ICBA) called on senators to oppose amendments to the Postal Service Reform Act of 2022 (H.R. 3076) that would authorize the U.S. Postal Service to offer additional banking services. ICBA also called on the Senate to amend Section 3703 of the act, which would allow USPS to partner with state and local governments on non-postal services, to explicitly prohibit postal banking.

In a letter to Senate leaders, ICBA President and CEO Rebeca Romero Rainey said postal banking would lead to significant revenue losses for taxpayers that would divert resources from the USPS’s core mission of delivering mail on time. She noted the lackluster results of a postal banking pilot program launched in September that had only six customers as of January, indicating almost nonexistent demand and a failure to generate revenue to cover expenses.

“Congress should focus on shoring up the finances of a critical government agency and explore better and proven alternatives for expanding access to low-cost financial services such as empowering minority depository institutions and promoting the use of financial technology in partnership with established community banks,” Romero Rainey said.

ICBA detailed postal banking flaws in a three-part series of policy briefs to Congress last year, which said:

  • The pursuit of postal banking would harm the USPS’s already-stressed primary function—mail delivery.
  • USPS does not possess the know-how to succeed at banking.
  • Community banks are committed to serving their communities, including unbanked populations.

About ICBA
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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