House Republicans Claim Pilot Postal Banking Test is Illegal
House Republicans are claiming the pilot postal banking test, a program long opposed by credit union groups, is illegal. Learn why.
Credit union groups have also long opposed USPS locations offering postal banking services.
The U.S. Postal Service (USPS) is violating federal law by testing a check-cashing program at post offices, key House Republicans told Postmaster General Louis DeJoy Wednesday.
“The program violated long-standing prohibitions that prevent USPS from offering or developing new non-postal products, and over the course of four months, it proved extremely unpopular,” House Financial Services Committee ranking Republican Patrick McHenry of North Carolina, House Oversight and Reform ranking Republican James Comer of Kentucky and House Consumer Affairs and Financial Services Subcommittee ranking Republican Blaine Luetkemeyer of Missouri, wrote in a joint letter.
What Does the Postal Banking Pilot Entail?
The Postal Service began testing the program at USPS retail locations on September 13 in the Washington, DC; Falls Church, VA; Baltimore, MD; and Bronx, NY areas. Customers in these locations can cash a paycheck to purchase a single-use gift card for up to $500. Checks larger than that are not accepted, and no cash is disbursed.
Postal Service officials said that despite the low numbers of people who have used the service, they are extending the program past March 31, the originally planned end date.
The Reason for Republican Opposition
In addition to running afoul of Postal Service-specific laws, the House GOP members claimed the decision to extend the program violates last year’s omnibus appropriations bill. In that bill, congressional negotiators specifically rejected a House-passed provision that allowed a pilot program.
“Congress’ actions make clear the USPS should remain focused on its core mission,” the letter stated. The group added that Republicans will conduct oversight of the program should the Postal Service continue it. They did not, however, describe what that oversight would be.
Where Credit Unions Stand on Postal Banking
Credit union and other financial services trade groups have traditionally stood together in their opposition to postal banking.
B. Dan Berger, president/CEO of the National Association of Federally-Insured Credit Unions (NAFCU) recently reiterated this stance, claiming the “program stretches the bounds of the Postal Service’s statutory authority and allows the underfunded and understaffed USPS to unfairly compete with credit unions who are already meeting the needs of low- to moderate-income individuals.”