Growing Our Common Wealth™
USPS Inspector General: Postal Banking Can Work
by Susan Harman on May 31st, 2015

It is with great pleasure that Commonomics USA notes that the US Postal Service Inspector General David C. Williams has, for the second time in a year and a half, endorsed expanding the Post Office’s financial services. We are equally pleased that he agrees with us that most of the services recommended in his "Approach 1" can be started almost immediately.
Timing is important because, although it is generally acknowledged that the payday lenders prey on the poor (with interest rates and fees amounting to as much as 1500%), what’s less generally acknowledged is that—until our economy works as well for the 99% as it does for the 1%—these predatory financial servers are a very necessary evil. The sooner the Post Office can offer a reasonably-priced alternative to the predators, the better for the poor and the un- and under-banked of this country.
The silver lining of the thriving predatory financial services industry is that it provides the post office a menu of services, their popularity, and their profitability validated by years of real-life experience; no need to “market test potential new products” (unless, of course, they are more innovative than those offered by the predators).
The Report offers several Approaches for collaborating with established financial institutions. Commonomics USA takes the strong stand that we need to distinguish sharply between small community banks and credit unions on the one hand, and the huge Wall Street banks on the other. We think the USPS under no circumstances should lend its trustworthiness and good name to the Too Big To Fail banks by collaborating with them.
We understand this collaboration has the advantage of the convenience of dealing with one partner, but a similar advantage can be had by dealing with the organizations of community banks and credit unions, instead of with individual small banks and CUs. And the downside of partnering with the convicted criminals of Wall Street makes this approach toxic. (Several big banks recently pleaded guilty to felony charges. They and other big banks have paid billions in civil fines and penalties for fraud and other wrongdoing.)
It’s difficult to rank which of these crimes is the most toxic, but for the USPS’ purposes, the worst is that the TBTF banks are the financial backers for the predatory financial services industry. It is these Wall Street banks who are profiting from the despair of the poor through their payday lender middlemen. If the USPS’ goal is to provide much-needed financial services to the poor, the last people they should partner with are the banks who benefit most from the payday lenders.
Finally, we respectfully disagree that a full-fledged postal bank is impractical, as some people believe. Numerous other developed countries, and even under-developed ones, have done it well. Are critics essentially saying the US is are so incompetent, a "public option" for basic financial services is beyond our reach? Nonsense. Further, we have a running start: 30,000 paid-for post offices and clerks who already handle pure financial transactions every day.

As we all are painfully aware, the nation’s roads, bridges and other public structures (collectively, “infrastructure”) currently require $2.75 trillion worth of repair and replacement by 2020, according to the American Society of Civil Engineers. One immediate use for postal savings deposits can be the formation of a capital base for a National Infrastructure Bank, with the aim of substantially reducing financing costs for public works projects.

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