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15/2/13 13:09![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
telemann.livejournal.com
The U.S. Post Service is curtailing its Saturday delivery in an effort to save money. It was required by Congress to pre-fund its pension fund 75 years in advance (something that no other government agency does). After Wal-Mart, the Post Office is the largest employer in the United States, but its workers get a living wage, and are unionized. And unlike the Pentagon, the Post Office is required to break even.
Bypassing all the back and forth over privatization, allowing Fed-Ex or UPS to compete, one solution to help the Post Office is to restore its banking ability. I was pretty surprised to learn the Post Office even had been operating as a savings bank. You can read about its history here.
Starting in 1911, the United States Postal Savings system allowed Americans to deposit cash with certain branch offices of the Postal Service, at 2% interest. The system held $3.4 billion in deposits for four million people by 1947; though it lost its advantage of depository insurance in the 1930s with the advent of the FDIC, it survived until 1967. The system was primitive—it was essentially a certificate of deposit that the Postal Service subsequently re-deposited in participating local banks, earning 2.5% and keeping the extra 0.5% for administrative costs. But it aided Americans by accepting money not circulating in the economy, adding convenience to the banking system, and promoting lifetime saving. Eventually, private banks changed their rules to compete for the unbanked and offer more attractive services. Congress determined that the Postal Savings system was no longer necessary. But with the end of free checking and consolidation of the commercial banking system, the need for a public option to foster competition has returned.1
With over 10 million Americans without access to banking (a lot of them in rural areas), and the Post Office's 32,000 retail windows, I think this is a wonderful idea. The The National Association of Letter Carriers is for the idea, and some studies suggest banking fees would improve the Post Office balance sheet to the tune of ten percent per year, and provide a much needed service for rural and lower incomes who are illegible for traditional banking accounts and are often the victims of non-traditional services, such as "pay-day-loans" which can charge as much as 400 percent APR. Everyone on the left and the right agrees that access to a banking system is critical for the financially disadvantaged to have some hope of getting out of poverty. So to me, this is a definite "win-win."
✔ brings banking to remote rural areas
✔ brings banking to economically disadvantaged and gets 11 million into the financial
✔ helps the Post Office's bottom line by raising an additional 7 to 10 percent
[1.] Signed, Sealed, Deposited. Pacific Standard, by David Dayen • Published 15 February 2013.
