Using Technology to Deepen Democracy, Using Democracy to Ensure Technology Benefits Us All

Wednesday, July 16, 2014

We're Another Step Closer to Growing the Post Office Into Low-Cost Banking

David Dayen writes in Salon today about the improving prospects for a great idea I've written about wistfully here from time to time:
Darrell Issa, chairman of the House Oversight Committee which oversees the Postal Service, previously called postal banking “unacceptable” and a “massive expansion” of government power. But now, the Senate Homeland Security and Government Affairs Committee... finally held hearings for four nominees to the Postal Service Board of Governors... For most of the Obama Administration through to today, Republicans held a majority on this board thanks to multiple vacancies. But confirming these nominees would equalize the representation at four Democrats and four Republicans (the President still needs to nominate a replacement for an additional vacant seat, which would give Democrats the majority). This would put the pieces in place that could make postal banking a reality... Democratic nominee Vicki Kennedy -- Ted’s widow -- did say... “I think it also important to look at the possibility of expanding into related business lines,” and that the post office needed the “regulatory flexibility to take advantage of opportunity and innovate when it is in the public interest.” Postal banking serves that capacity... 1 in 4 American households with little or no access to financial services need a convenient, cheap banking option, so they don’t continue to get gouged by... payday lenders and check-cashing stores. Another Democratic nominee, Stephen Crawford, cited the Inspector General report on postal banking directly during questioning. “We see a lot of foreign postal services make some money on that,” Crawford correctly pointed out... “If I were on the board, that’s an area I would give special attention to.” ... Even more momentum comes today from a full-day conference in Washington on postal banking... Speakers include Sen. Elizabeth Warren, Issa and Postal Service Inspector General David Williams... The unbanked favored the post office making available prepaid debit cards by 38%-9%... And a large majority said they would be likely to use lower-cost versions of these services: 81% would go to the post office to cash checks, 79% to pay bills and 71% as an alternative to payday loans... “There’s a lot of interest if they can use postal services at a lower price point,” said Alex Horowitz, a researcher at the Pew Charitable Trusts... [B]y virtue of its universal service mandate, it has a network of 35,000 locations in every corner of the country. And where banks have not made the effort, the post office has significantly more reach, particularly in rural America... 3.5 million Americans live more than 10 miles from the nearest bank branch, and another 3 million live in densely populated areas that are nonetheless still over a mile from the nearest bank... Even in some urban locations, particularly in high-poverty areas, the closest postal branch location offers more convenience than the bank. And with bank closings more pronounced in low-income areas, the value of post offices as a financial services alternative could grow... Check-cashing stores and payday lenders... are ubiquitous in poor communities... But... low cost and convenience could give postal banking a leg up... Public outcry, largely from postal unions and their allies, has led to the Postal Service ending their pilot program of post office counters inside Staples, staffed by non-union workers at lower pay. [Grrrrrr! --d] The announcement came... after the American Federation of Teachers... voted to boycott Staples in solidarity with postal workers... [Yay, Unions! --d] Believers in postal banking have some high-profile support and some key facts. Now they need to organize and act... [T]here’s no reason the United States cannot respond to technological changes in mail volume by returning to offering financial services, which aligns with its core mission of promoting commerce. It certainly beats closing more distribution centers, firing more workers and squandering a vast network of physical and human capital that can serve some of the nation’s critical needs.
Republicans are endlessly attacking the post office and postal workers (as they attack every aspect of government that does conspicuous public good and maintains a good public reputation), and this is an idea which would make the beleaguered postal service more solvent and hence more insulated from these ideological anti-civilizational attacks. And it would do so while at once transforming the landscape of financial services for the working poor, both urban and rural, as well as providing a contrast of fair fees and good service that might begin to pressure the venal con-artists of big banking into better practices in these areas themselves. This is a good idea and it's time has come. Of course, even a Democratic majority on the Board is little likely to provide more than a pilot program, and the changes will likely take years, but the exploitation of people who work for a living by the payday lenders and cash card sharks is a problem years in the making, too, and a couple more Democratic terms in the White House can shepherd these processes into implementation while the Republicans howl and do their usual worst.

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