As the Obama administration continues its full-on assault on aspects of the private sector lending industry, Americans are now supposed to believe it’s purely a coincidence that the beleaguered U.S. Postal Service suddenly wants to offer financial products. The plan would see the failing agency begin offering those same loan products presently in the crosshairs of the administration’s Operation Choke Point to millions of Americans with little or no credit.
Democrats on the Hill naturally think this is a great way to save the Postal Service and protect low income Americans from allegedly predatory lending practices. But the plan is yet another unjustified interference with the free market in favor of a government-centered program and massive new bureaucracy in the making. Here are the top ten reasons your Post Office shouldn’t be your bank:
10. Because you stand in line enough already at the DMV
Government agencies have never been accused of being models for efficiency and customer service. Proponents of USPS lending believe that the sheer number of Post Office storefronts will provide greater access to financial products. They fail to acknowledge that private sector lenders already have thousands of accessible locations and an efficient online process for lending. The reason consumers overwhelmingly prefer private storefront and online lenders is because of the convenience and anonymity of taking out the loans. It’s hard to believe that that the USPS, already known for its inefficiency will provide anything close to the service consumers currently get from private lenders.
9. If you actually have a job, it’s not open when you get there
The Post Office opens after you start work for the day and closes before you’re done. So, if you have to be at your desk by 8:30 and punch out at or after 5pm, heading to the Post Office to get your payday loan is probably not going to happen. Improving access to services would mean extending hours — which would cost millions the Postal Service doesn’t have.
8. The same guy who gives you stamps would be your financial advisor
Say what you want about private sector banks and those payday lenders, but when you use them to access financial products you are dealing with individuals who have at least some financial expertise. There is peace of mind for the customer and because those companies are assuming the risk, they have a vested interest in making sure consumers make smart choices. The guy stamping “fragile” on that package for your aunt in Toledo doesn’t cut it.
7. It may actually violate federal banking laws
Not that this would matter to the Obama administration, but it may be illegal to begin with. The USPS proposal has suggested that loans would be repaid by having paychecks or government benefits deposited onto a “Postal Card.” The Postal Service would take loan repayments from what is deposited on these cards giving them first crack at your money. Even the left has sounded the alarm about this disturbing tactic, and when the President doesn’t even have the support of his base, you know there is something to be concerned about.
6. As if the IRS and NSA don’t have enough of your personal information
Elizabeth Warren and administration don’t want to talk about this, but pushing people to use the Post Office as their lending institution will give the government access to Americans’ financial information on a scale never before seen. With the CFPB tracking credit card purchases, the NSA monitoring communications, and the IRS being used as a political hammer, the last thing Americans — particularly low-income ones — need is the government having more of our personal information. That leads to more control over our daily lives and the potential involvement of federal law enforcement in debt collection.
5. They can’t compete selling their own products and services
One of the chief reasons the Postal Service is drowning in red ink is the simple fact that it hasn’t been able to compete with private sector competitors who offer similar products. The USPS market share for package delivery continues to dwindle as the agency is saddled with increasing legacy costs and rising employee compensation. It’s a failed business model. Changing the model to include financial services amounts to a Hail Mary pass with no one in the end zone, and the numbers prove this latest idea won’t save the agency.
4. What’s next, IRS auditors delivering babies?
The fact of the matter is the Post Office was created to deliver the mail. That’s what they are supposed to do. The whole notion that it should expand into areas that have no connection to mail delivery and compete with legal, successful private sector industries makes about as much sense as the IRS opening up a medical practice just because they happen to have an office down the block.
3. One word — Obamaloans!
This Postal Service scheme is really about a larger plan to provide government-backed alternatives to private sector lending. It will take the redistribution of wealth to a whole new level. While the administration actively destroys aspects of private sector lending through a program called Operation Choke Point, they are putting up new ideas to finance high-risk borrowers. These alternatives include the Post Office and government-funded non-profits that will backstop loans with tax dollars. This is the same formula used to push Obamacare on America — and it will have the same impact. We are seeing what happened to health insurance when Obamacare was passed. Our economy would not survive if the same were undertaken in the financial services sector. Remember, it’s the “year of action.”
2. Because the postal service is in worse financial shape than you
Would you use a bank if you knew it was broke? Of course not, but that doesn’t matter to Democrats who support Post Office lending. In 2012 the Post Office ran a $15 billion deficit. They can’t manage their own books but believe people should look to them to help manage personal finance. It’s an arrogant presumption on the part of this failing agency that should throw up a red flag for every American concerned about government overreach.
1. If you don’t pay, we all pay for it
Unbanked and underbanked Americans need convenient, reliable access to short-term financial products. Those already exist and the private sector bears the risk for offering those products to borrowers who lack credit. As the number of pieces of mail continues to drop and costs rise, the Post Office won’t be able to provide loans at the drastically reduced cost they claim — without additional infusions of cash from taxpayers. Ultimately, with this and other administration schemes to destroy private sector lending, loan defaults will be paid by the taxpayer and that money will be as good as gone.
Andrew Langer is President of the Institute for Liberty. Learn more at www.instituteforliberty.org.