Should the Postal Service be making high-interest loans?

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It’s ironic the U.S. Postal Service, an agency that operated at a net loss of $26 billion over the past two years, is considering going into the loan business. Actually, more like the loan shark business.

That’s a direction it should not go as a way to ease its serious financial problems.

Congress, which has already handcuffed the USPS with unfair financial demands and policies, seems likely to get involved — make that over involved — when constituents start complaining about having to pay back loans with 28 percent interest. The agency also wants to cash paychecks and issue debit cards.

Given the sea of red ink USPS is swimming in, it’s understandable why the agency is looking to increase cash flow. An analysis by the Postal Service Inspector General Office estimates the agency could earn $8.9 billion in annual revenue if it could snag just 10 percent of the interest and fees generated by the payday loan industry. That’s 68 million Americans who don’t have the credit to get lower interest loans.

Banks and other private-sector lending institutions are fighting this proposal for a variety of reasons, including unfair competition.

“This new entity could be perceived by many as a government-endorsed and preferred provider of financial products,” said Ken Clayton, chief counsel of the American Bankers Association, a lobbying group. “The impact on banks already serving these communities would be substantial.”

The USPS is not, however, aiming at competing with banks. Its officials are more interested in cutting into the payday loan industry. Some of those outfits are shady, charging triple-digit interest rates that suck people into a never-ending circle of debt.

The government, state and federal, has an obligation to continue to regulate those legalized loan sharks to protect consumers.

Competing with them seems a slippery slope. Charging less exorbitant interest rates than unscrupulous characters isn’t something the government — or even a quasi-government agency such as the USPS — should even consider.

When Americans feel they are getting ripped off, and some surely will, Congress will investigate, hearings will be held, chests will be thumped and the USPS will ultimately suffer — at least financially.

About 85 percent of the USPS’ current deficit can be traced to a congressional mandate. The post office has to pre-fund the postal service retiree health care and pension benefits 75 years into the future. The pension account is over-funded and reserves for retiree health care are far higher than other federal government agencies and nearly all large private companies, according to an Inspector General analysis.

USPS officials need to deal with its own financial problems, not delve into the fiscal plight of Americans.

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