I’m all for outside-the-box thinking. Fresh ideas and brainstorming are as important in community banking as they are in any other business. But sometimes an idea comes along that is so bad—so half-baked and ill-considered—that it should be politely heard…and then squashed outright before it has a chance to gain any traction.
In case you missed it, we got just such an idea the other day with a proposal that the U.S. Postal Service get into the banking industry. The money-hemorrhaging agency’s Office of the Inspector General recently recommended that the Postal Service offer financial services, such as prepaid debit cards, loans and remittance services. Consumers would be able to load cash or their paychecks onto a Postal Service payment card that would be covered by an FDIC-insured partner bank (presumably a very large one).
Well, I guess if the Postal Service’s primary business and expertise of selling postage stamps and delivering junk mail can’t balance the books, why not financial services? I mean, banking is a piece of cake, and there’s hardly any risk involved, right?
The truth is that this proposal is a dead letter. It raises a pile of problems and appears to be a last-ditch effort to save the struggling government agency from bankruptcy and taxpayer-funded bailouts.
First of all, consider the motivation. The Postal Service has rung up seven consecutive years of net losses and is defaulting on required payments to its retiree health-care plan. It has lost $25 billion in the past three years, reached its $15 billion debt limit a year and a half ago, can’t borrow another dime from the U.S. Treasury, and is coasting on fumes. For some reason I don’t think this is a good jumping-off point for a foray into retail banking.
Second, consider the expertise, or lack thereof. The Postal Service is failing at doing the one thing it knows how to do—delivering mail. What makes it think it could add financial services to its bag of tricks in the first place? I enjoy football, but I don’t expect to get a shot in the NFL if this community banking thing doesn’t work out.
Finally, let’s see this proposal for what it is—an attempted government intrusion into the financial services sector. The last thing we need is more government intervention in Americans’ personal finances. The postmaster general himself has said the Postal Service operates a “broken business model.” If government conducted its operations efficiently and apolitically, we wouldn’t need UPS and FedEx.
So, please, let’s move on. The Postal Service’s entry into the banking world is no more desirable than me suiting up for the Seattle Seahawks. I understand that the Postal Service is running low on options, but surely there’s a better plan out there somewhere. Anyone got any ideas?