Dive Brief:

• A community banking trade group is calling for the U.S. Postal Regulatory Commission (PRC) to investigate JPMorgan Chase's talks with the U.S. Postal Service (USPS) about offering banking services at some post office branches.

• Reports that the bank had explored the idea of leasing space for ATMs at several locations were first reported last week by The Capitol Forum and confirmed by a JPMorgan Chase spokesperson who said the conversations were "preliminary" with "no agreement in place and no imminent plans to move forward."

• "Equitable access to basic banking services must be discussed and addressed by policymakers and the entire financial services industry — not in a vacuum between an independent government agency and a single, privileged financial institution," Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey wrote in a letter Monday to PRC Chairman Robert Taub. The PRC, an independent federal agency consisting of five commissioners, did not respond to Banking Dive's request for comment.

Dive Insight:

Romero Rainey attacked what she called JPMorgan Chase's record of "abusive and discriminatory consumer practices," and said any partnership with such an institution "is not a solution that the Postal Regulatory Commission or Congress should entertain without transparency."

"Any exclusive arrangement, negotiated behind closed doors, to allow a profit-driven entity to leverage the USPS branch network is a formula for corruption and should be a serious concern to all Americans who care about the integrity of our public institutions," she wrote, adding the agency should issue a request for proposal (RFP) when considering creating exclusive access to its network.

The head of the ICBA also questioned the merits of pairing a bank with the Postal Service.

Advocates for placing banking services inside post office branches say the effort would expand banking services to the country's unbanked population. 

"[T]he postal branch network does not have sufficient reach into low income, high unemployment communities or minority communities," Romero Rainey argued. "In fact, the nation's 52,000 community bank locations have greater penetration into these communities, and any initiative to reduce the unbanked population should leverage the existing network of community bank branches."

An exclusive arrangement between JPMorgan Chase and the U.S. Postal Service would draw deposits away from communities, Romero Rainey said.

"Community banks reinvest deposits back into the communities from which they are drawn," she said. "Deposits in JPMorgan, by contrast, through postal locations in rural America or elsewhere would be lost to the communities from which they are drawn and invested in other, more profitable markets."

Credit unions have also expressed their concern regarding a potential USPS deal with JPMorgan Chase. 

"The Credit Union National Association (CUNA) strongly opposes the idea of leasing taxpayer-funded space to a Wall Street megabank," a spokesperson for the trade group said. "This would fail both consumers and the USPS. If the goal of postal banking is to serve consumers in the communities they live and work in, then the Postal Service should partner with community institutions like credit unions or community banks, not the country’s largest bank."

"Allowing Wall Street mega banks free [rein] to solicit customers from community post offices would amount to nothing more than a power grab aimed at bolstering profits," National Association of Federally-Insured Credit Unions (NAFCU) President and CEO Dan Berger said in a statement. 

A U.S. Postal Service spokesperson did not directly address the agency’s talks with JPMorgan Chase, but said its "core function is delivery, not banking."

"To the extent our research concludes that we can legally provide additional services at a profit and without distracting from our core business, we would consider these," USPS spokesperson David Partenheimer said. "However, public policy and regulatory discussions must be addressed before the Postal Service invests in an area outside our core function."

Reports that the nation’s largest bank had explored a partnership with the Postal Service come amid increased scrutiny of the agency’s funding and its ability to handle an influx of mail-in ballots amid the coronavirus pandemic.

Democrats grilled Postmaster General Louis DeJoy on Capitol Hill Monday, saying the agency’s recent operational changes could jeopardize mail delivery ahead of the election.

DeJoy told lawmakers the U.S. Postal Service is "fully capable and committed to delivering the nation's ballots securely and on time."