The United States Postal Service as a Financial Services Provider

by The CAB Man Texas on February 12, 2014

So the United State Postal Service might become a financial services provider? I have been hearing about this over the last couple weeks, and am I missing something here? Perhaps I don’t have all the facts, but is this really being considered as a possibility by our Federal government?

I think that the Post Office offering financial services such as bill payment, debit cards, and savings accounts could theoretically be possible. Has anyone been to a Post Office recently? How could they manage to add on such high touch, data sensitive, disclosure heavy, non-traditional services? The Post Office loses billions of dollars every year, it is antiquated, archaic, and lost in the past. How would these new services be launched, managed, and made profitable? The most important question regarding anything to do with the Postal Service is: could it ever be profitable? If not, then what is the point? These are crucial points that any successful business person would make, so how about the media publishes some comments from business people on the matter? Consumer Advocate groups dominate the public forum with strong media support, but the problem with that is their groups typically aren’t saddled with the need to turn a profit!

Post Office lines are long and slow, the offices are understaffed, and the average Postal worker I encounter when I go to a local office doesn’t exactly come off as pleased to serve me. There is a systemic dysfunction within the Postal Service that could be a very large road block to the addition of financial services to its existing workload. Will the government hire more people to work there to handle the larger workload? Will the government pile more payroll expense onto an entity that loses something like $10 billion per year? I haven’t really seen anyone else make that point in the media – and I haven’t even gotten into the topic of small dollar loans yet.

Here are some more questions that must be asked… Is the government going to lend consumers money? Who will provide the funds for the short term loans? Is a government agency that loses $10 billion per year now going to fund small dollar loans to consumers in need of emergency credit? What interest percentages are they going to charge? One more thing: it is very easy to fund a loan – who is going to collect on the loan? 99% of the loan business is collecting! Is the United States Post Office going to also be a “Collections Agency?”

The Post Office’s record and profitability make it the absolute worst candidate for loaning consumers money, they would lose millions in taxpayer dollars, guaranteed. This is another important point that Consumer Advocates never consider – consumers often do not pay back loans at all, and many consumers must be consistently communicated with to keep from defaulting. People make jokes about the government giving money away, well this program would certainly end up as some of the easiest money ever.

Consumer Advocate groups are opponents of my clients and it is my opinion that these groups want to see all of us out of business, despite my being told otherwise. It is also my opinion that Consumer Advocate groups will never be satisfied until loans are made at 0%, despite my being told otherwise. Now these groups tout the Postal Service as the next in line to fight against predatory lenders in the “Payday Loan” industry.

So, when the Post Office funds loans to consumers at 36% APR are the Consumer Advocates going to go after the government for taking advantage of the very citizens it is there to serve? Problem is, the Post Office is going to have to charge more like 500% APR to be profitable, and don’t forget that will only put them in position to be profitable. What if they do a really horrible job? It could get really bad.

I have to say that I do not want a single penny of our country’s tax dollars going towards the Post Office offering financial services. I am sure millions of people feel the same way. This would be an absolute nuclear bomb of a loss, so many people would be fired and resign over this idea that it would go down in history as one of the most epic failures on record.

I would love to hear your comments on this, and would be thrilled to see any of these comments get picked up in the media. Submit a comment or reach out to me as always at 214-293-8676 or via email at Michael@CreditAccessBusiness.com.

{ 1 comment… read it below or add one }

Jer - Trihouse February 12, 2014 at 11:50 pm

Michael,

Insightful commentary! I can’t imagine taxpayers funding these loans! Worse, the banks are going to “partner” with the United States Postal Service? The ultimate “loan sharks.”

Add to this equation the collection call center personnel working out of India! “Hi, my name is Bobby and you’re going to prison if you don’t pay my client, the United States Post Office, their MONEY! (WOW! Great Blog Post idea!)

In order to pull this off, the FED’s would have to provide clarity and federal direction regarding the 50 states. Why not do this now and allow entrepreneurs to figure out how to construct an appealing product and compete with one another? Why should taxpayers, the FED’s, the U.S. Post Office and banks collaborate and compete against private business?

Next, the FED’s, in conjunction with consumer literacy groups, will decide the American reading level is not what it should be and launch a new enterprise to compete against Amazon.

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