The U.S. Postal Service Office of Inspector General issued a white paper in January proposing a new line of business: providing nonbank financial services to the “underserved” by handling bill payments, making small loans, offering international money transfers in order to bolster the Post Office’s ability to remain financially self-sustaining. In an op-ed piece for the Wall Street Journal, Professor Liasa Servon calls this proposal into question based on her research into businesses that already provide such services.
In her article, Professor Servon points out various gaps in the white paper’s proposal including how it does not explain how the Postal Service would offer better prices than check cashers and payday lenders already do—and make money, how it fails to specify how the Postal Service would develop effective risk scorecards for underserved segments of the population, and how it does not describe collections routines for delinquent loans, or how its loan model would generate a profit.
