On July 24, 2014, Rep. Cedric Richmond (D – LA) introduced a bill that would allow the U.S. Postal Service to offer banking services to its customers. Under the bill, Post Office customers could open checking accounts, deposit into interest-bearing savings accounts and apply for small-dollar loans. The bill also supports the issuance of the “Postal Card” which would act like a debit card giving customers access to in-store, mobile and internet transactions.
This bill does appear to have an immediate positive return for citizens. It would open up financial services to areas where banks may not have a physical presence and could draw unbanked and underbanked individuals into the mainstream financial process. It cannot be argued that having bank-like services at every Post Office in the nation would further access for customers.
On the other hand, by allowing the Post Office to enter the “banking” market, the bill would immediately create a national competitor to community banking, further impeding community bank efforts to maintain their customer base in a world where customers are increasing avoiding branch banking. As highlighted earlier this week by the American Banking Association, ever-expanding regulation is pinching banks to the point that they are exisiting traditional banking business lines in efforts to stay profitable or in some cases, to even stay open.
Of particular concern is that, unlike banks, the Post Office does not currently have to comply with the requirements of the Community Reinvestment Act. In the simplest terms, by allowing the Post Office to develop products to market to the unbanked through their 31,135 locations, it makes it even more difficult for community banks to meet their CRA obligations.