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June 27, 2018

The Honorable Steven Mnuchin
Secretary of the Treasury

US. Department of the Treasury
1500 Avenue, N.W.
Washington, DC 20220

Secretary Mnuchin,

As President Donald Trump?s special task force on postal reform ?nalizes its
review of the Postal Service, I request that the task force consider recommending a
prohibition on any pilot programs, enhancements, or expansion to its nonpostal
banking services.

While the concept for postal banking is nothing new, it?s still a terrible idea.
According to the Brookings Institute, postal banking would create a government
subsidy that puts taxpayer on the hook to ?nance.1 While that is reason enough to
be concerned, the fact that the Postal Service would be the one to administer this
program is cause for greater alarm. Over the past few years, the Postal Service has
managed to oversee a massive data breach of almost a million customers and
employees? personal data and Social Security numbers,2 and the Postal Service was
audited for having insuf?cient controls in place to stop money order fraud used for
money laundering schemes.3 Putting Americans? hard-earned money at risk at an
agency with that kind of track record would be a recipe for disaster.

 

1 Peter Conn-Brown, Why the next big bank shouldn?t be the USPS, The Breaking Institute Center on
Regulations and Markets (May 31, 2018).

2 Laura Stevens, Danny Yadron and Devlin Barrett, Postal Service Says It Was Victim of Data
Breach,? Wall Street Journal (Nov. 10, 2014).

3 Of?ce of Inspector General United State Postal Service, ?Controls to Detect Money Order Fraud
Audit Report,? Report No. DP-AR-13-002 (Feb. 7, 2013).

And yet, despite the egregious errors and public assurances that its ?core
function is delivery, not banking,? the Postal Service seems headed down a
dangerous path. In July 2016, the Postal Service reached an agreement with the
American Postal Workers Union establishing a joint task force to create a pilot
program to modernize its money orders and expand international money transfers.

To be sure, a collective bargaining agreement does not magically create new
powers for the Postal Service to offer more banking services. Nor does the
underlying legal framework allow the Postal Service this type of leeway. 0n the
contrary, Congress made clear in 2006 that the Postal Service is prohibited from
offering new, nonpostal services and that the Postal Regulatory Commission must
approve even ?adjacent? nonpostal products in the future. In other words, any
attempts by the Postal Service to expand or enhance its banking services are well
beyond the scope of its statutory authority.

Still, the labor union contract shows that the Postal Service might need
reminding that it has zero authority to expand or enhance its nonpostal banking
services, particularly without Congressional approval. I appreciate the task force?s
hard work in comprehensively reviewing the Postal Service and request that as part
of its review, the task force ?nally put the bad idea of postal banking to rest.

Sincerely,

   
 

Patrick McI?Ienry
Vice Chairman
Financial Services Committee