WASHINGTON (7/17/14)--The Pew Charitable Trusts hosted a full-day conference Wednesday to examine the effectiveness of the U.S. Postal Service offering financial services to underserved communities. The idea, first envisioned in January in a white paper by the USPS Office of the Inspector General, was analyzed by a variety of financial professionals and legislators.
|Ryan Donovan (right), senior vice president of legislative affairs for CUNA, and Adam Levitin, a professor at Georgetown University Law Center and member of the Consumer Financial Protection Bureau's Consumer Advisory Board, greet as they prepare for Pew Charitable Trusts' full-day conference to examine the effectiveness of the U.S. Postal Service offering financial services to underserved communities. (CUNA Photo)|
Ryan Donovan, senior vice president of legislative affairs for the Credit Union National Association, participated in one panel discussion that looked at ways to provide financial services to the underserved. Donovan was joined by Dong Hong, regulatory counsel for the Consumer Bankers Association; Adam Levitin, a professor at Georgetown University Law Center and a member of the Consumer Financial Protection Bureau's Consumer Advisory Board; and Jana Barresi, director of federal government relations at Wal-Mart.
Donovan said he was skeptical about the idea of the USPS providing financial services to the underserved, particularly when credit unions are already in place to meet those needs.
"We need to increase awareness among the unbanked that affordable financial services options are available and convenient through the credit union system," he said. "A part of increasing awareness of credit unions is erasing the misconceptions about credit unions. Everyone cannot join the same credit union, but there is a credit union for everyone to join. Most people don't know this, and that needs to change."
Sen. Elizabeth Warren (D-Mass.), during her keynote address, reinforced Donovan's point.
"If post offices teamed up with their closest credit unions or community banks, they could provide a pathway for millions of people into the traditional banking system," she said, as reported by American Banker Wednesday.
Donovan pointed to current credit union services aimed at reaching a variety of populations, including ASmarterChoice.org and its app, recent efforts highlighting 100 million credit union memberships, a system of shared branching and a wide-ranging surcharge-free ATM network.
CUNA has advocated for solutions to help credit unions expand further, including less regulatory burden, access to supplemental forms of capital to help credit unions expand services and a re-examination of field of membership requirements, which Donovan said has contributed to slowing credit union growth.
"If the doors to credit unions were open wider, the penetration into the underserved market would be even greater," he said.
Levitin weighed in several reasons why a postal banking system might be needed, but several, such as living in a country with no deposit insurance, aren't applicable.
While a public banking option through the USPS might help drive "abusive products" from the marketplace through competition, Levitin said that there's little evidence to suggest this would help people who are currently unbanked.
In addition, if the services were to be used as a way to solve the Postal Service's budget issues, that would create a conflict between goals of taking in needed revenue and the desire to offer better services to the underserved, according to Levitin.
Donovan did say CUNA could envision some form of partnership with the USPS at a local level. There are currently 191 credit unions in 47 states that are or have been affiliated with post offices.
"We could envision the possibility of other credit unions leasing spaces at post office to open branches, kiosks or ATMs," he said. "Beyond that, it's hard to envision how much further such a partnership might go. We would be willing to engage the Postal Service in this conversation."