Citizens Against Government Waste (CAGW) named Sen. Elizabeth Warren (D-Mass.) its February Porker of the Month, after she spouted off about the silly suggestion that the United States Postal Service (USPS) should be permitted to expand its now limited activities deeply into financial services.
Sen. Warren's comments came shortly after the publication of a January 27, USPS Office of Inspector General Report (OIG) report that explored the possibility of having the agency, which currently sells money orders, dabble more into what the IG called "non- banking services," such as payment services, savings options and credit services.
Sen. Warren expressed her support for this concept in a February 1Huffington Post op-ed, in which she wrote, "If the Postal Service offered basic banking services - nothing fancy, just basic bill paying, check cashing and small dollar loans - then it could provide affordable financial services to underserved families, and, at the same time, shore up its own financial footing...USPS could partner with banks to make a critical difference for millions of Americans who don't have basic banking services because there are almost no banks or bank branches in their neighborhoods." While the IG was careful to use the term "non-banking services," presumably in an attempt to prevent anyone from thinking that the USPS was going to turn into a bank, Sen. Warren had no such qualms. She thought it would be a good idea for the USPS to offer "basic banking services" and suggested that it was "worth reading David Dayen's article [in] the New Republic -- 'The Post Office Should Just Become a Bank: How Obama can save USPS and ding check-cashing joints.'"
"Somehow, 'take that to the Post Office' doesn't have quite the same ring as 'take that to the bank,'" said CAGW President Tom Schatz. "Rather than spending 'a lot of time working on' expanding the postal service's operations, as Sen. Warren said she would do, she and her colleagues should instead be working on enacting legislation that would improve the postal service's ability to achieve its core mission to deliver mail while not suffering multi- billion losses into the foreseeable future. Banking and non-banking services are currently well-served by private-sector business with expertise in those areas. If the USPS wants to get into banking or any other business, then it should give up its government privileges and move toward a fully competitive model. It is unfortunately not surprising that a member of Congress would extrapolate that because the USPS sells money orders that it would be great in...banking! Just because someone can build a paper airplane does not mean her or she should run Boeing or Airbus. The whole idea is a dead letter."
According to a release, the USPS reported a $5 billion loss in fiscal year (FY) 2013, the seventh consecutive year of losses. According to September 6, 2011 testimony by the GAO before the Senate Committee on Homeland Security and Governmental Affairs, the USPS business model is "broken." The GAO's recommendations to fix the problems at the USPS did not remotely suggest that the agency should expand into new lines of business. Indeed, since delivering the mail is the agency's business, it strains all limits of credulity to believe that starting another business could save its primary business.
It appears that there is another motivation behind Sen. Warren's new crusade. She doesn't like the payday lending industry and believes the USPS could do a better job in providing short-term loans, which the IG claims could be provided for a longer period of time at a lower cost. However, there is absolutely nothing in the IG's report about securing those loans with collateral, other than suggesting that the federal tax refund offset program could be used to collect any debts. In other words, the short-term loan program is likely to be another federal effort to lend money that the government has to borrow from future generations without worrying about whether or not it ever gets paid back. On top of potential competition from the USPS, payday lenders are also being squeezed under the Dodd-Frank Act, which calls for $100 million in funds to set up taxpayer-financed institutions to provide what many are calling "Obamaloans."
Although the expansion of the USPS into new lines of business should require congressional approval, David Dayen suggested that the President should just "step in" and urge the USPS to act unilaterally as part of the President's plans to act without going through the legislative process. According to the IG, the USPS could just "explore options within its existing authority" to provide additional non-banking financial services beyond money orders.
For her preposterous idea to allow the USPS to play Mr. Monopoly in order to chase profits without a scintilla of structural reform and expand into new businesses instead of preserving its core business, while setting the stage for another enormous taxpayer bailout, Sen. Elizabeth Warren is CAGW's February Porker of the Month.
CAGW is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.
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