When Senator Kirsten Gillibrand (D-NY) and Congresswoman Yvette Clarke (D-NY-9) introduced the Postal Banking Act^,[1] calls for establishing a postal banking system increased.^[2] Postal banking, as established by the bill, would allow the U.S. Postal Service to provide low-interest loans, checking and savings accounts, and other basic financial services.^[3] Commentators emphasized that the bill would not only expand access to banking for millions of underserved households and provide a source of revenue for the cash-strapped U.S. Postal Service, but would also undermine the predatory payday lending industry.^[4]

Although Senator Gillibrand and Congresswoman Clarke’s legislative proposal is driving the public conversation, little attention has been paid to the quiet movement to establish postal banking through regulatory means.^[5] Activists began pushing for small-scale reform following the publication of the U.S. Postal Service Office of Inspector General’s 2014 white paper, which posited that the agency could work within its existing authority to provide financial services.^[6] Postal banking advocates should consider regulatory efforts alongside congressional proposals in order to bypass political gridlock and lay the groundwork for future legislative efforts to be successful.

The regulatory reform movement is centered around the proposition that the U.S. Postal Service already has the ability to implement postal banking in offices across the country.^[7] In the 2014 white paper, the U.S. Postal Service Office of Inspector General asserted that “given that the Postal Service is already providing money orders and other types of non-bank financial services, it could explore additional options within its existing authority.”^[8] The report suggested several types of basic financial products that the U.S. Postal Service could begin to offer, such as reloadable prepaid cards and bill payments.^[9] It also detailed how postal banking would be beneficial not only for underserved Americans, but also for the health and stability of the U.S. Postal Service.^[10] The publication of the report sparked the organization of several advocacy groups, such as the Campaign for Postal Banking, to push for action.^[11] Some of these small-scale efforts have already seen success. For instance, in 2015, an agreement between the U.S. Postal Service and the American Postal Workers Union (“2015 National Agreement”) established a task force that could implement pilot programs to offer financial services at post offices.^[12]

With President Trump calling for the privatization of the U.S. Postal Service and congressional Republicans leery of expanding agency power, the Postal Banking Act is unlikely to become law within the next few years.^[13] However, given the independent nature of the Postal Service, a regulatory solution from within the agency could overcome political divides in Congress and the White House to advance positive change for underserved Americans.^[14] The Postal Service is an independent agency and the Postmaster General is appointed not by the President, but by the Board of Governors.^[15] Because independent agencies are distanced from presidential control, the U.S. Postal Service is more likely to be insulated from the current partisan climate and members of the Board would be able to take rational, data-driven proposals under consideration without fear of losing reelection.^[16]

Regulatory efforts could also pave the way for successful future legislation. For instance, the pilot programs made possible by the 2015 National Agreement could provide a foundation for future legislation by producing empirical evidence demonstrating that postal banking can make a significant difference for underserved communities. In addition, judicial approval of a regulatory scheme would grant postal banking policy more legitimacy. According to administrative law experts, judicial review can legitimize regulations by holding unelected agencies accountable and reinforcing the legal authority of agencies to issue certain rules and policies.^[17] Thus, Postal Service regulations that withstand court challenges could enjoy the stability of judicial approval and could provide firmer footing for regulators and legislators upon which to expand postal banking.

In essence, postal banking advocates should explore the regulatory route in order to avoid political gridlock and build a foundation for successful future legislation. After all, regulatory activists and legislative backers have more on which to agree than to fight. Although they may disagree on the process, they share a substantive goal: to expand access to financial services for millions of Americans who are prevented from participating in the banking system.^[18]

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[1] S. 2755, 115th Cong. (2018); H.R. 5816, 115th Cong. (2018).

[2] Jordan Weissmann, Kirsten Gillibrand Unveils Her Ambitious Plan to Turn the Post Office Into a Bank, Slate (July 30, 2018, 6:24 PM), https://slate.com/business/2018/04/kirsten-gillibrands-ambitious-postal-banking-bill.html.

[3] S. 2755; H.R. 5816.

[4] Abby Vesoulis, Millions of Americans Can’t Afford a Checking Account. The Post Office Could Fix That, Time (Aug. 7, 2018), http://time.com/5351706/postal-banking-kirsten-gillibrand; Katrina vanden Heuvel, Trump’s Privatization Plan Would Destroy the Postal Service, Washington Post (Aug. 7, 2018), https://www.washingtonpost.com/opinions/trumps-privatization-plan-would-destroy-the-postal-service/2018/08/07/caaf9a24-99a2-11e8-8d5e-c6c594024954_story.html?utm_term=.f54fc5bde107.

[5] Alan Pyke, Gillibrand’s Post Office Banking Bill Bypasses Years of Careful, Quiet Work to Kill Payday Lending, Campaign for Postal Banking (Apr. 27, 2018), http://www.campaignforpostalbanking.org/news/gillibrands-post-office-banking-bill-bypasses-years-of-careful-quiet-work-to-kill-payday-lending.

[6] Office of Inspector Gen., U.S. Postal Serv., No. RARC-WP-14-007, Providing Non-Bank Financial Services for the Underserved 1–28 (2014), https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-14-007_0.pdf; Pyke, supra note 5.

[7] Pyke, supra note 5.

[8] Office of Inspector Gen., U.S. Postal Serv., supra note 6.

[9] Id. at 10–14.

[10] Id. at 14–17.

[11] Am. Postal Workers Union, Allies Launch Campaign for Postal Banking, Am. Postal Worker (Apr. 20, 2015), http://www.apwu.org/sites/apwu/files/resource-files/Mag%20March-April%202015v2.pdf.

[12] 2015 National Agreement, Am. Postal Worker Union (July 8, 2016), 265 https://www.apwu.org/sites/apwu/files/resource-files/_%5BMar16%2717%5D%20Online_2015-18%20APWU%20CBA_1.pdf.

[13] vanden Heuvel, supra note 4.

[14] The Cabinet and Independent Agencies, Washington Post, 5 (Feb. 12, 2013), https://nie.washingtonpost.com/sites/default/files/CabinetandIndependentAgencies.pdf.

[15] 39 U.S.C. § 202(c) (2012).

[16] The Cabinet and Independent Agencies, supra note 14.

[17] See, e.g., David L. Markell & Emily Hammond, Administrative Proxies for Judicial Review: Building Legitimacy from the Inside-Out, 37 Harv. Envtl. L. Rev. 313, 314 (2013).

[18] Vesoulis, supra note 4.