2. Adding financial services to the list of things the USPS does errantly presumes current and future postal station workers will have the knowledge, desire, and willingness to add to their burden.
While it’s true that mail deliveries are still declining, it’s also true that the United States Postal Service has largely matched that decline with a reduction in its workforce for the past few years. So, it’s not like the workload on a per-employee basis has become light for Post Office desk workers over the years.
To ask them to handle payday loans and other financial services — which requires more attention — while postal customers are lining up may push these employees past their tipping point. And heaven help the worker who has to deal with an angry or difficult cash loan customer.
3. Legally and structurally, the idea is complicated to the point of being impossible.
The Post Office has no intention of becoming a bank, nor does it need to in order to perform basic services like check cashing or money orders. If it aims to dive deeper into card-based money storage or payday loans, however, it will need at least one financial partner to be the middleman.
While many have assumed banks would be lining up to take on that role, remember, these are the customers banks didn’t want. In fact, mainstream banks like U.S. Bank and Wells Fargo recently nixed plans to get into the high-interest short-term loan business specifically to avoid pending legislation.
Would these be more desirable customers if the USPS packaged them up and aggregated their assets — and their risks — into one chunk? Possibly. Many large banks already quietly offer financial backing for lenders of payday loans, as it’s a very profitable business to be in.
If the United States Post Office dives into the game, however, the visibility of the venture will require a heck of a lot more transparency and accountability. See, someone in the mix eventually has to carry the risk of bad debt on their books, and if a big bank does it, shareholders could balk … particularly if the venture isn’t earning predatory-level interest rates.
But what if the USPS forgoes a bank partner and carries all the risks on its books? Then ultimately the taxpayers are on the hook, and for a fiscal train wreck like the United States Post Office, that’s never going to be allowed to happen.
Kudos to the USPS for thinking creatively in its time of need. But, complicating the business of parcel and post delivery be tiptoeing into unfamiliar waters isn’t the way to do it.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.