Dear Comrades,
Talk about killing two birds with one stone; here’s an idea that can take down a whole flock.
It’s called postal banking, and it could help rescue the Postal
Service, make banks nicer to the little guy, raise the national savings
rate and cut the cost of financing the national deficit.
This is not a new idea. A vast array of nations from Germany to India
offer their citizens financial services through the post office. We do
too, a little, by selling money orders and package insurance. But we
used to do much more.
From 1910 to 1967 Uncle Sam ran the Postal Savings System. It paid 2
percent on deposits (which peaked at $3.4 billion in 1947) and reaped
2.5 percent by putting the money into local banks, thus covering the
cost of operations. Customers could save as little as 10 cents at a time
by filling a postal savings card with stamps and then turning it in for
credit.
Consider the possibilities. The Postal Service is in financial
trouble partly due to meddling by Congress, but also because the digital
revolution is driving down mail volume. Congress wants the place run
like a business, but won’t let the service set prices, close
money-losing outlets or otherwise be businesslike. The government,
meanwhile, backstops the for-profit banking system without charging for
this valuable service. These same banks treat low-income customers like
pinatas, beating fees out of them at every turn.
The postal banking alternative is old, established and could easily
work here. There are post offices all over America, and they already
handle lots of cash. Postal deposits could be invested in Treasury
securities for ironclad safety, and these new funds would likely reduce
Uncle Sam’s cost of borrowing, saving money for taxpayers. Instead of
the certificates used by the old Postal Savings System, depositors would
get debit cards.
A postal bank could make money in several ways. Users could pay
modest fees for checking and other services, and the system could pay
out less in interest than it earns on the Treasuries it would buy.
Since the goal isn’t to drive banks out of business, individual
accounts could be capped at some appropriately modest sum, and there
would be no loans except to Washington. Even so, this new postal
competition should force banks to treat their smaller customers a little
better — while rescuing many poor Americans from the teeth of costly
check-cashing outlets and payday lenders.
Could postal banking be big enough to make a dent in Postal Service
deficits? Well, the Japanese postal bank has more than $2 trillion in
deposits, and the United States is nearly three times as populous. It’s
not inconceivable to imagine an American postal bank throwing off an
annual profit of $5 billion, which is what the Postal Service lost in
its last fiscal year (although losses seem to be accelerating).
Besides, aiding the Postal Service is the least of the plan’s virtues
— and postal banking by itself can’t save the system, which needs to
change regardless. More important is that postal banking would put the
government once again on the side of encouraging thrift. People with
savings don’t need payday lenders, after all. Accumulating capital can
help them weather emergencies, start businesses and buy homes.
A postal savings system would give people a trusted place to save
right in their own communities, without outrageous fees or sales pitches
for tricky products. Postal banking could take its place alongside
other cherished non-market institutions, such as Social Security and
public libraries, that help Americans help themselves. People love their
libraries. Why not let them bank on their Postal Service?
http://onlineathens.com/opinion/2012-05-02/akst-banking-ways-save-postal-service
