30 June 2013

An Old Idea Whose Time Has Come Again

The idea that, in addition to having the US Post Office serve our letter carrier needs, that we have them supply basic retail banking services again:
On July 27, 2012, the National Association of Letter Carriers adopted a resolution at their National Convention in Minneapolis to investigate establishing a postal banking system. The resolution noted that expanding postal services and developing new sources of revenue are important to the effort to save the public Post Office and preserve living-wage jobs; that many countries have a successful history of postal banking, including the U.S. itself; and that postal banks could serve the 9 million people who don’t have bank accounts and the 21 million who use usurious check cashers.

The USPS has been self-funded throughout its history, but it has been recently driven to insolvency because in 2006, Congress required it to prefund postal retiree health benefits [3] for 75 years into the future, an onerous burden no other public or private company is required to carry. The USPS has evidently been targeted by a plutocratic Congress bent on destroying the most powerful unions and privatizing all public services, including education. Britain’s 150-year-old postal service is also on the privatization chopping block, and its postal workers have also vowed to fight. Adding banking services is an internationally proven way to maintain post office profitability.
Not only has it been done before, it was done in the United States in my lifetime:
The now-defunct U.S. Postal Savings System was also quite successful in its day. It was set up in 1911 to get money out of hiding, attract the savings of immigrants, provide safe depositories for people who had lost confidence in private banks, and furnish depositories with convenient hours. Deposits ranged from $1 to $2,500, and the postal system paid 2% interest on them. It issued U.S. Postal Savings Bonds that paid annual interest, as well as Postal Savings Certificates and domestic money orders. Postal savings peaked in 1947 at almost $3.4 billion.

The U.S. Postal Savings System was shut down in 1967, not because it was inefficient but because it became unnecessary after its profitability became apparent. Private banks then captured the market, raising their interest rates and offering the same governmental guarantees that the postal savings system had.
This is a good idea for a number of reasons
  • It would allow for an alternative to hit the ground running when (not if) the next time that the big banksters crash and burn.
  • It would allow for small depositors, who routinely take it up the ass from commercial banks, to have an alternative that is also national in scope.
  • It would help the Post Office out of its current Congressionaly generated financial crisis.
In order to take down the banksters, you have to do more than just regulate them: You need to create an effective state owned and operated alternative.


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