Mr. President, Let Us Put OUR Money Where YOUR Mouth Is: Post Office Banks
Or: ‘A Breakthrough for Post Office Banking Courtesy of the USPS Inspector General, We Hope’
(h/t to Juliania via Naked Capitalism via David Dayen) Potential action items are at the end of the post.
How? By allowing the USPS to engage again in banking by offering savings accounts, debit cards, and even small loans. The Inspector General teamed up with experts on international postal banking, and liked what he learned. Many nations around the world offer postal banking, of course.
To begin with, the group discovered that over 68 million USians have either no access, or only limited access to traditional financial services (2011 pie chart here). Many of them are poor, and dependent on usurious pay day loan and check-cashing outlets, and were gouged to the tune of $89 billion in fees and interest in 2012. At a 90% discount for the same services, it could save the average banking-underserved family $2000 a year, and reap the USPS $8.9 billion in profit a year, helping out its balance sheet.
The report suggests three types of potential products. First, it proposes a ‘Postal Card’ that could make in-store purchases, access cash at ATMs, pay bills online, or transfer money internationally. Customers with paper checks could cash them at the post office or deposit them through their cell phones, loading them onto their Postal Card. Second, the USPS could offer an interest-bearing savings account, again through the Postal Card, encouraging savings from communities with little in the way of a personal safety net. Finally, the Postal Service could offer small-dollar loans, effectively an alternative to costly payday lending. The fees on all these services would be drastically lower than anything in the marketplace today.
The postal service, with public trust earned over generations and 35,000 outlets in the best real estate in practically every city in America (in fact, the report notes, 59 percent of all post offices are in ‘bank deserts’ with only one bank branch or less), is well-positioned to deliver simple financial services. In fact, it did for over 50 years. Begun in 1911, the Postal Savings System allowed Americans to deposit cash with certain branch post offices, at 2 percent interest. By 1947, the system held deposits for over four million customers. Though dismantled in 1967 (after banks offered higher interest rates and eroded its market share), the post office continues to issue domestic and international money orders, including $22.4 billion worth in 2011, as well as prepaid debit cards through a deal with American Express.
But indeed, the IG makes the case that there’s enough precedent that since the PO already provides money orders, etc., that the Postal Accountability and Enhancement Act, which restricted new ‘non-postal’ services wouldn’t apply. Dayen also cites the Chevron administrative deference SCOTUS ruling as allowing a rather wide interpretation.
Dayen notes that in his recent SOTU, el Presidente made much of his plans to issue executive orders (bypassing Congress) in aid of reducing inequality and job creation, and that sort of ‘campaigning for Dems for the midterms’ stuff. Given that bold an defiant rhetoric (ha), and the fact that the IG recommended postal banking as sincerely helpful for the US in several different directions, he notes that issuing orders for postal banking to commence would be a hummmdinger of a way to start (okay, that’s my verbiage, not DD’s).
But: Obomba could help preserve and *increase* postal jobs, save billions of dollars for the poor and well, any of us, and create those ‘ladders of opportunity’ he claims to love.
Yes, the American Banking Association and others will deride the idea, but if you think of it, postal banking services by and large wouldn’t compete with banking, since … traditional banking isn’t even available to so many folks. We could make a case that getting the money stuffed in mattresses out into circulation might even help the economy, as might being able to borrow against half of one’s SS security or other income. But even that isn’t the point, is it? It’s the citizens -as-consumers trope, which idea is rather hideously capitalistic.
Why the IG’s White Paper is Important Right Now
You probably are all familiar with the 2012 shock doctrine austerity moves to privatize the Post Office, close boatloads of branches, and sell off many wonderful ones built and lovingly decorated as New Deal WPA/Art projects. (Jim Emerson shares his photos of them here) Since 2000, over half a million career postal employees have been laid off, and many delivery services have been contracted out to UPS and Fedex. Then in January 2013, further hell was rained down upon the Post Office, when among other events, a major report ‘Restructuring the U.S. Postal System: The Case for a Hybrid Public-Private Postal System’ was published, and its neoliberal race was being galloped toward the finish line.
Sure and it’s a workable plan to keep making the USPS pre-fund seventy-five years of worker health care costs mandated in 2006, and create conditions in which $4 of the $5 of USPS ‘insolvency’ from which it’s nigh on to impossible to get out from under. Or to force closures and limit hours and deliveries that cause customer dissatisfaction and inefficiency, while claiming that ‘no one uses the postal services since the advent of email’ bullshit.
And lest we forget: The post office is Ours, as in: The Commons, with the second largest workforce in the US, second only to … er … Walmart. Yes, over half of the postal workers are (sinfully) union members, while the private entities UPS and Fedex are not, and those are the companies to whom many of the traditional PO services are being increasingly contracted.
Privatization schemes? Consider that in 2011, an exclusive contract to sell postal facilities was given to CBRE and DiFi’s clever uber-capitalist hubbie, Richard Blum. Last week the Postal Service released the official lists of post office closings and suspensions in FY 2013. The Postmaster General, Patrick Donahoe, seems only too willing to dismantle the post office; baffling, isn’t it?
Different folks have been advocating for post offices to act as public banks for some time now, including at least two of the postal workers unions, but also the head of the Public Banking Institute, Ellen Brown, so how very cool that the IG’s report was issued just ahead of two different attempts to bills to ‘modernize’ the post office, one good, one a wolf in sheep’s clothing.
Before I get to them, allow me to introduce Brown’s newest piece on the idea. She is advocating for using postal banking to fund an infrastructure bank that would cost the government: nothing! Here she is on that idea, and contrasting the two bills:
The Carper-Coburn bill (S. 1486) is the subject of congressional hearings this week. It threatens to make the situation worse, by eliminating Saturday mail service and door-to-door delivery and laying off more than 100,000 workers over several years.
The Postal Service Modernization Bills brought by Peter DeFazio and Bernie Sanders, on the other hand, would allow the post office to recapitalize itself by diversifying its range of services to meet unmet public needs.
Needs that the post office might diversify into include (1) funding the rebuilding of our crumbling national infrastructure; (2) servicing the massive market of the ‘unbanked’ and ‘underbanked’ who lack access to basic banking services; and (3) providing a safe place to save our money, in the face of Wall Street’s new ‘bail in’ policies for confiscating depositor funds. All these needs could be met at a stroke by some simple legislation authorizing the post office to revive the banking services it efficiently performed in the past.
In fairness, the Senate legislation proposed by Sens. Tom Carper (D-Del.) and Tom Coburn (R-Okla.), changes the agency’s payments toward retirement benefits (40 years amortized), but allows for a phasing out of both Saturday and to-the-door mail delivery if those moves are necessary to make ends meet. It has other creepy features as well; the proprietor of the great Savethepostoffice.com website parses it.
The Sanders/DeFazio bill would rescind the 2006 Bush era pre-funding law. Whew.
The National Association of Letter Carriers (NALC) is urging our support for the Sanders/Defazio bill, as well as H.R. 961, a measure that calls for a refund of the USPS’ surplus in FERS (Fact sheet), as well as H. R. 30 (Fact sheet), “expressing the sense of the House of Representatives that the United States Postal Service should take all appropriate measures to ensure the continuation of its 6-day mail delivery service.”
So. May I urge you to make some noise about all this? It’s hard not to think it’s almost too late, but we need to contact everyone we can, and not just take this shite. The Senate Committee on Oversight and Homeland Security began to debate the Carper bill yesterday, but something stalled it after three hour, according to the APWU. They recommend that we contact the members of the committee listed toward the end of the piece, and of course, all our Critters. I’d add the White House to the list, especially about an executive order to create postal banks … for the good of the poor, and all of us.
But please: Don’t let them kill the Post Office! And a note to Canuckistans: Beware of this coming to a theater near you.
cross-posted at Cafe-Babylon.net