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Transcript of Postal Banking?
Description of policy
providing non bank financial services
Providing non bank services
United States Postal Service office of Inspector general
(IG) David C. William
unbanked and underserved
68 million Americans
check cash/ payday/pink slip
89 billion paid in fees /interest(2012)
Non bank financial services
USPS career employees
Wednesday, March 19, 2014
Vol XCIII, No. 311
What's the problem with the USPS?
Financial services drive earning at foreign Posts !
Problems affecting the USPS:
Increased internet Usage
Decreased letter volume
(2006) HR 6407 PAEA
5.6 billion per year
56 billion (2006-2017)
spending into retirement fund and additional operational costs exceed revenue intake
Switzerland( 71% operating profits)
New Zealand (70% of profits)
Italy (67% of profits)
France (36% of pretax earnings)
United Kingdom( 25% of profits)
" if the postal service offered basic banking services-nothing fancy, just basic bill paying, check cashing and small dollar loans then it could provide affordable financial services for underserved families and at the same time, shore up its own financial footing"(The Huffinton Post)
Sen. (D-Mass) Elizabeth Warren
Sen. (I-Vt) Bernie Sanders
Co-sponsor of Postal Modernization Bill
Intent of this policy is to provide non bank financial services to the unbanked and underserved, while increasing postal revenues.
How can it be done?
USPS Board of Governors
Direct policy(Expenditures, practices,planning)
9 member panel (five Vacancies)
Bank deserts 6/10 (low income areas)
Currently provides money orders/transfers
Foreign bank procedures(niche, diversity, strengths, reputation)
How was the postal service retiree healthcare funded prior to mandate?
pay as you go method
OPM determined cost(premiums)
2005 retiree healthcare cost $ 1.5 billion
2006 retiree healthcare cost $1.6 billion
2007 retiree healthcare cost $ 10 billion
1.7b (premium) 2.9b(PSRHBF escrow acct) 5.4b(schedule payment)
Do you think that other organizations that offer unbanked citizens credit and high rates will oppose this policy?
According to Ken Clayton, Chief council of the American Bankers Association(lobby)," This entity could be perceived by many as a government-endorsed and preferred provider of financial products...the impact on banks already serving these communities would be substantial"(Washington Post)
Results of policy
Since this policy answer is a recommendation by the USPSOIG, the results have yet to be seen.In addition based on my research and the facts:
Past history of offering banking services
= Solvency for USPS
Dayen, D.(2014). Obama's partly to blame for the postal service backward ways.
retreived from http:// www.newrepublic.com/article/116558/postal-service-banking-relies-obama-use-his-appointment powers
Douglas, D.(2014, Jan 6).Expanding financial services is available route for postal service, report says.retreived from http://www.washingtonpost.com/business/economy-financial-services-is -available-route-for-post-office-report-says/2014/01/27/5bd974e8-8788-11e3-833c-33098f9e5267_story.html
Lee, B.(2014 Sept,8). 5 things you need to know about the u.s postal service
retrieved from http://www.pbs.org/wnet/need-to-know-/five-things/the-u-s-postal-service/11433/
Levitin, A.(2014 Jan, 31). Postal banking:maybe not so crazy after all.
Retrieved from http:// www.americanbanker.com/bankthink/postal-banking-maybe-not-so-crazy-after-all-1065325-1.html
Nichols, J.(2014,Feb 11). Why we need a bank at the post office
Retrieved from http://www.thenation.com/article/178361/why-we-need-bank-post-office#
Sanders,B.(2014) http://www.sanders.senate.gov/newsroom/recent-business/banking-on the postal service
Warren,E.(2014, Feb 2). Coming to a post office near you: loans you can trust?
Retrieved from http://www.huffingtonpost.com/Elizebeth-warren/coming-to-a-post-n_b_4709485.html
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