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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.
July 29, 2022
Senate appropriators dropped an ICBA-opposed legislative proposal to expand the U.S. Postal Service’s banking pilot after ICBA urged lawmakers to block the plan.
Senate Bill: The Senate Appropriations Committee’s fiscal 2023 financial services appropriation bill leaves out funding to expand the USPS banking pilot program, which offers financial services in four locations.
House Efforts: The announcement hinders congressional efforts to support the pilot after the House Appropriations Committee last month advanced a bill with $6 million to expand the USPS program.
ICBA Pushback: ICBA recently called on the House to advance amendments that would block the funding, noting the lackluster results of the current postal banking pilot should prompt policymakers to abandon these proposals.