Monday, February 23, 2015

Postal Banks, Their Time Has Come Again

Close readers of PNG know that US Person has advocated weakening the strangle hold of Wall Street bankers on our nation by returning a service to the American post office: the postal bank. It is a service that works in other countries and would be fairly painless to begin again here. Until 1967 the Post Office, a government agency, operated postal bank services. Then came privatization in an effort to save money. No money has been saved and postal services have been drastically cut. Packages are mostly delivered by expensive private carriers; post office hours have been cut; staffing levels have been cut, yet a first class stamp now costs 43¢! Postal banking would generate needed revenue for the postal system and provide needed competition to the corporate banking system.

Post offices should not just sell money orders and cash paychecks, although those would be invaluable services for low-wage workers.  They should function as alternative neighborhood banks. That means being able to extend small amounts of credit to patrons who need a few dollars to pay expenses until the next paycheck comes in. Now, payday loan companies charge usurious rates of interest and fees providing the same emergency funds. In 2012 that rip-off of the working poor amounted to $89 billion. Customers with established accounts at a US post office could get small loans at reasonable rates, pay bills on time and even buy prepaid debit cards. People without bank accounts or credit cards could have their government benefit checks sent directly to their post office, a form of direct deposit that would save the government millions. 7% of Americans are "unbanked" according to FDIC statistics for 2013.  A similar, successful service called "Direct Express" already exists at the Treasury Department. To encourage saving, now at record low levels, a postal bank could offer a passbook savings program at competitive rates, and it could allow customers to borrow against their passbook savings, if needed, at even lower interest rates.

Using existing infrastructure, the Postal Service could perform these vital functions and break the total monopoly big, private finance has on consumer credit. Even the postal union (APWU) is on board with the idea of resuming banking service at post offices. At the new contract talks that start soon, it will ask the US Postal Service to bring back the postal bank, another public option good for America.