Corbett says pursuing financial services would only be a distraction to the USPS in executing a proposed financial plan that would lead to a modest profit by 2014. The effort includes things like reducing service from six days to five days a week, adjusting work hours to better suit demand and working with Congress to change legislation that caps postage rates.
From the perspective of bankers, Corbett's position on the idea is just as well: government-backed competition would not be welcome.
"Banks have enough problems with taxpayer-subsidized competition as it is now, in the form of the credit unions and the farm credit system," says Bert Ely, an independent banking consultant with Ely & Co. in Alexandria, Va.
But Mercator's Jackson points out that the USPS getting into financial services could potentially benefit the banking industry as it did under the Postal Savings System. Back then, the law required that the post office redeposit most of the money it received from consumers into local banks, where it earned 2.5 percent interest. The post office paid its depositors 2 percent interest. The half-percent difference was intended to cover the cost of operating the Postal Savings System.
Bankers generally opposed the government initiative at first, but warmed up after realizing that many people who previously stashed their spare cash at home had started buying into the idea of a savings account.
Jackson concedes there would be challenges with introducing financial services through the Postal Service. For example, while he mainly sees the agency's many locations as an advantage, there would be an expense associated with outfitting all those locations with the infrastructure needed for distributing new products.But partnering with a financial services provider potentially could reduce the startup cost. "They don't necessarily have to build something from scratch," Jackson says. "They could white-label it."
Still, Ely is skeptical. "A lot of post offices are really busy and have long lines. My theory is as they cut back on the number of post offices and try to cut costs, the window service at the post office is going to get even worse."
But perhaps the biggest obstacle to the post office selling banking products is political. Even getting prepaid cards into its lobbies was an uphill battle. "You would think that would be a slam dunk, but nonetheless it took intense discussion and finally approval by our regulators before we were allowed to do that," Corbett says.
Corbett is hopeful that, with legislative support, the USPS can get back in the black within a few years. And then it's anyone's guess whether banking at the local post office might be a possibility, provided the financial services sector isn't quite as crowded with competitors as it now, he says.
"In five years, if the landscape is different and we're at an operating profit, nothing's off the table if it makes sense," Corbett says.
