This is a great idea, to which I will append the two added notions that branches of the public bank should be located, among other places, in United States Post Offices (further embedding in the social fabric and hence better insulating these vital public services from incessant reactionary right attacks) and that a system for public financing of elections could eventually be facilitated through the dispersal of a set, equal amount of public funds to every citizen through their public banking account earmarked for expenditure on their preferred candidates...
via The Roosevelt Institute
via The Roosevelt Institute
NEW YORK, NY – In a new report, the Roosevelt Institute calls for the establishment of an alternative option to the currently privatized financial sector. The report, A Public Option as a Mode of Regulation for Household Financial Services in the United States, co-authored by Roosevelt Institute Fellow Mark Paul and Loyola Marymount University Assistant Professor Thomas Herndon, outlines why a new approach to household financial services is necessary and how it could be structured.
The report documents that a large segment of America today is badly served by the traditional financial sector, with 19.9 percent of households being under-banked. A household is deemed under-banked when it either has no access to a checking or savings account at an insured financial institution or has such unreliable access to these entities that it must rely on predatory, high-cost alternatives like payday lenders and pawnshop loans. With basic access to the financial sector a pre-requisite for full participation in the 21st century economy, these exclusions effectively leave nearly one in five households economically stranded. Communities of color are disproportionately harmed by these exclusions.
To ameliorate this economic divide, the report advocates the creation of a public option for finance in which the U.S. federal government would establish a public bank that provides basic transaction services and consumer credit. In addition to meeting the immediate needs of the under-banked, this approach would have the added benefit of setting a new baseline standard for conduct and practices of the entire financial sector. In effect, it would be a bottom-up regulatory tool based on a new and improved floor in how banks can operate and would thus encourage healthy competition in the market.
“In America, it is really expensive to be poor, and our current approach to banking reinforces this harmful dynamic,” said Mark Paul, Fellow at the Roosevelt Institute and co-author of the report. “A public option for banking would empower millions of families by giving them a foothold of financial stability. It would also make it much harder for private-sector banks to continue getting away with abusive practices like excessive fees. In one major restructuring of finance, this public option would make our economy more inclusive and bring about a healthy, constructive dose of true competition.”
“Imagine a life with no direct deposit, no visits to the ATM, and no auto-pay on the monthly bills you’d rather forget,” said Thomas Herndon, co-author of the report. “These hardships are just a snapshot of what it’s like to be unbanked—a challenging reality for millions of people in the United States. During the New Deal, this country helped offset the failures of the private banking industry by creating a new set of regulations and public alternatives. By walking away from that progressive spirit and commitment, we ended up with the dysfunctional and exclusionary economy we see today. It’s past time for policymakers to act bold and meet this challenge head-on.”
For years, the Roosevelt Institute has been a leading voice calling for an overhaul of the U.S. banking industry and the need for these changes to bring about a more equitable, broadly prosperous economy. In 2016, the Institute released Untamed: How to Check Corporate, Financial, and Monopoly Power. Paul has contributed to the Institute’s research on how new rules would bring about a better economy. His recent report Don’t Fear the Robots: Why Automation Doesn’t Mean the End of Work was covered in The New York Times and Politico. Last year, Herndon released Liar’s Loans, Mortgage Fraud, and the Great Recession, which documented fraud and consumer protection abuses in the securitized mortgage industry.
2 comments:
Having been a postal worker for a short time earlier in my life, you need more perspective as to how a postal bank would be very difficult to manage and facilitate.
The problem, dear friend, is that current postal employees would not make very good bank tellers. Aside from postal workers occasionally going "postal", absconding mail or losing mails, I personally would be vary hesitant to do my financial dealings at the post office. There would be other factors such as limited facility space, as most post offices are already woefully short of facility size and many rural area post offices would not be adequate. Additionally, there are security issues that post offices do not have available and the postal service cannot possibly hire qualified people to run a bank given the postal service presently running in the red. You do have some merit to your idea if postal banking were to be limited only to simple transactions such as deposits and withdrawals and not full blown banking services. This would be useful for the disadvantaged and homeless that currently have no safe place to keep what little money that they have providing that postal bank services were to be free. Present postal workers could provide this simple service as they do for postal money orders.
There are always problems, tho' some basic incapacity or tendency to rampages in postal workers as a cohort scarcely seems to me like the most serious on offer. I agree that a public banking option should probably limit itself to basic services -- indeed, quite a lot of the financial sector that does not limit itself to basic services looks to be a socially injurious scam in any case. As for the inadequacy of rural post offices -- seems to me to be a fine occasion for public investment in sustainable post office/public s&ls facilities, perhaps adjacent to farmer's markets/food pantries to deal with food deserts/food poverty and provide tourist supporting rest stops/local community center meeting spaces, etc. Thanks for your ideas and comments.
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