EDITORIAL: Going postal and you can bank on it

The mailman wants to be your friendly banker

Neither snow, nor rain, nor heat, nor gloom of night stays these couriers from the swift completion of … your banking needs.

Since the U.S. Postal Service can’t compete head-to-head with the private delivery firms FedEx, UPS and email — the postal service lost $5 billion last year — the mailman thinks he can be a better banker than the likes of Citibank, Chase, Bank of America and Capital One. Good luck with that.

A provision in a postal reform bill moving through Congress would turn the Post Office into a low-dollar lender. It’s a dream come true for the big spenders seeking a new revenue source to keep the 522,000-member postal workers unions afloat.

This new government bank would provide loans and bank-like services for customers who don’t have a checkbook and don’t have the collateral to get a loan.

The idea is comes from Sen. Elizabeth Warren, a full-time Democrat and part-time Indian from Massachusetts, who envisions a post office that could “make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods.”

Her imaginatively absurd proposal brings new meaning to the term “going postal.”

The Postal Service is looking for something to escape the weight of a mountain of compounding debt, standing now at $61 billion. A report by the Postal Service inspector general calculates that the banking scheme would pull in an estimated $9 billion for the cash-starved agency.

“The Postal Service could help financial institutions fill the gaps in their efforts to reach the underserved,” the inspector general, who insists that the post office would not compete with private-sector financial institutions.

The assumption underlying this scheme is that banks aren’t interested in “underserved” areas because they’re “racist.” If $9 billion were actually on the table, every big bank in the country, racist or not, would jump at the chance to offer these services.

This scheme to resurrect the old Postal Savings System, which operated from 1911 until 1967, would likely be a disaster. Despite nearly three centuries of practice, the post office has a difficult time doing what it has been trying to do since Ben Franklin was deputy postmaster general in 1753.

Why would the post office have more success as a bank than in delivering the mail? Low-dollar lending is a high-risk market; default rates run as high as 40 percent. Only the best survive in this field.

The Federal Deposit Insurance Corporation has been been running a low-dollar lending pilot project with private banks over the past few years, and it hasn’t exactly been a success. If private sector banks lose money under this program, why would anyone expect the Postal Service to do better?

Every loan by the post office would put taxpayer dollars at risk. The last thing America needs is more billion-dollar losses and subsequent billion-dollar bailouts. We’ve had quite enough of those already.

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