Republican leadership of the House Financial Service Committee and the Committee on Oversight and Reform today called upon the postmaster general of the U.S. Postal Service to stop the extension of a financial services pilot program that the lawmakers claim has been in violation of statutory restrictions from its inception.
The four-city pilot program—which was launched quietly in September last year and extended earlier this month—allows customers to cash payroll and business checks to pay for Visa gift cards of up to $500. Lawmakers say the program was started without approval from Congress or the Postal Regulatory Commission and, therefore, its extension continues to violate regulations prohibiting the USPS from offering nonpostal products and using taxpayer funds for programs related to nonbanking financial services.
“Indeed, the program’s popularity reflected the fact that it was not designed in response to customer demand—only six gift cards were issued under the pilot and total fee revenue was $35.70,” the lawmakers wrote in their letter to the postmaster general. “In light of the fact that the pilot program undoubtedly cost more to develop and implement than was raised in revenue, the subsequent decision to extend the program begs for an explanation as to why. Republicans on the committees of jurisdiction in Congress will conduct oversight of this program as USPS attempts to justify its continued existence.”
The American Bankers Association has long been a vocal opponent of the postal service offering financial products and services. “The solution to high retail check-cashing fees is a banking relationship, not a government-subsidized service through the post office,” ABA said in a past comment on the issue. “Policies that create new incentives for Americans to remain unbanked undercut significant efforts to bring people into the banking system so they can build for their financial future.”