The publication is reproduced in full below:
TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS ACT, 2023
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speech of
HON. PATRICK T. McHENRY
of north carolina
in the house of representatives
Tuesday, July 19, 2022
Mr. McHENRY. Mr. Chair, the report accompanying the FSGG appropriations bill includes ``an increase of $6 million above the budget request for USPS to carry out pilot programs to modernize its current postal banking services, including surcharge-free automated teller machines, wire transfers, check cashing, and bill payment.''
This ``Postal Non-banking Financial Services Modernization Pilot Program'' is yet another attempt by progressives in Congress to expand the U.S. Postal Service's core mission into the financial system. This concept is ultimately harmful to American consumers because it will crowd out private sector financial innovation to reach underserved communities.
That's why Rep. Luetkemeyer and I offered an amendment to prohibit funding in this bill from being used to carry out the Postal Non-
banking Financial Services Modernization Pilot Program. Unfortunately, our amendment was not made in order to the bill we're considering today.
Democrats have long called for USPS to be able to offer consumer banking services such as checking and savings accounts and extensions of credit to consumers and small businesses. These functions are beyond the Post Office's core competencies, will subject taxpayers to potential losses, will undermine the private sector's ability to compete with taxpayer-subsidized banking services, and pose a threat to consumers' privacy when it comes to financial data.
In 2018, the previous Administration created a special task force to specifically review the Post Office and identify necessary reforms. The Treasury Department was directed to release the Task Force's recommendations, which it did in its report, ``United States Postal Service: A Sustainable Path Forward.'' The Task Force's recommendations were clear: ``given the USPS's narrow expertise and capital limitations, USPS should not pursue expanding into new sectors, such as postal banking, the USPS does not have a demonstrated competency or comparative advantage, or where balance sheet risk would be added.''
Moreover, the Post Office agreed. In response to a widely criticized and highly unusual report by the United States Postal Service Office of Inspector General (OIG), the Post Office made clear that despite any recommendations to the contrary from the OIG, the Post Office's core mission ``is delivery, not banking.'' Postmaster General DeJoy reiterated this position.
Progressives argue postal banking is needed to address the decreasing number of bank branches and the rise in the number of people without access to a checking account or short-term credit. Democrats automatically believe that means that the government should provide these banking services, including through the Post Office. What Democrats fail to acknowledge is financial institution branch closures and consolidations result from overly burdensome government regulation, which won't be reconciled using more government.
Postal banking has been tried before. From 1911 to 1967, the United States had the ``Postal Savings System,'' run by the USPS' predecessor. The system provided savings accounts with interest rates set by the USPS and funds deposited in national banks near depositors' post offices. The system failed. Postal banking couldn't compete with private sector banking institutions. It did not have the flexibility to meet the needs of customers.
Moreover, American consumers demonstrated recently that they are not interested in banking with the USPS. Just last year, the USPS took it upon itself to create a pilot program to offer check cashing services in the form of gift cards. According to documents submitted to the Postal Regulatory Commission, only six gift cards were issued under the pilot program and total fee revenue was $35.70. The failure of the pilot program demonstrates the fact that it was not designed in response to customer demand and that consumers are not interested in banking with the federal government, including USPS.
Private sector financial institutions are highly regulated and operate competitively and flexibly in a market-based system. The ensures consumers' demands for innovative financial products and services are met, and they receive the best pricing for them. Congress should not stifle private sector innovation by financial institutions and fintech firms that have already shown promise for reaching underbanked and rural consumers.
The USPS should remain focused on its core mission. The fact that only six people used the postal banking pilot confirms that consumers remain supportive of the free market and look to private firms for technological solutions to meet their banking needs.
Postal banking is harmful to the financial system and ultimately harmful to consumers. It will crowd out private sector financial innovation and ultimately fail to reach the very underserved communities Democrats claim they want to reach.
The USPS should remain focused on its core mission, not creeping into the provision of consumer financial services.
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SOURCE: Congressional Record Vol. 168, No. 120(1), Congressional Record Vol. 168, No. 120(2)
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