Giving Some Love to Postal Banking

Postal Service ATM in Japan

New Orleans       The rise of interstate banking since 1980 has led to countless consolidations as major money center banks have reduced headquarters locations and branches where customers can easily do financial business.  The Wall Street Journal reported that 1700 branches closed in a one-year period highlighting a trend after acceleration up to 2009 when the banks competed for market share.   In the last decade US banks have closed 9000 branches.  According to the FDIC this was offset by smaller banks adding branches as they tried to move into the spaces left behind.

None of this is financial news.  For years banks have claimed to ACORN, directly when we were negotiating with them about their community investments, that they “lose money” on individual accounts.  Anyone with an account can testify to this as we are steadily pushed away from monthly printed statements and into on-line banking, along with constant e-marketing requests and efforts to upsell to other products.  Minimum balance fees for accounts and exorbitant charges of overdrafts have pushed many lower income and working families completely outside of the regular banking system.  For all of the big talk about financial education and literacy, the unbanked in the United States has been an unyielding problem even though there are claims that the number is falling.   In 2017, the U.S. had 8.4 million unbanked households, or about 14.1 million adults.

There is a solution in a neighborhood near you and everyone else:  postal banking.  Democratic candidates including Senator Gillibrand from New York and Senator Warren from Massachusetts have come out in favor of postal banking.

So, what is postal banking.  Simply put it would allow local post offices to offer banking services to families without accounts or credit cards.  In many countries, like Japan and India, postal banking is a secure savings system.  The Campaign for Postal Campaign has advocated using the postal system for check cashing, small loans, savings, and other basic financial services that are now either a void or filled by predatory businesses like payday lenders and check cashing facilities with exorbitant charges.  We have worked closely with postal workers unions in the US and Canada to attempt to expand these services as part of our effort to beat back predatory operators.

Interviewing Mark Dimondstein, the president of the American Postal Workers Union in 2017 on Wade’s World left no doubt at the support of postal workers for expanding vital services both to more fully utilize facilities and to maintain work and financing for the USPS.  Mehrsa Baradaran a law professor at the University of California at Irvine calls postal banking a “public option.”

It would be wonderful if postal banking finally received the attention it deserves as a support for all of the families that need accessible and affordable financial services.

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Banks, Too Big to Fail, but Too Small to Regulate, Huh?

Biloxi     Once upon a time in America, and much of the world, there was a reliable way to identify a populist.  The litmus test was their view of banks.  If they saw them as somewhere between a criminal enterprise and a bunch of blood suckers, then the odds were good that they were populists.  If they saw them as pillars of the community and local members of Rotary and supporters of the high school football team, then they were definitely not populists, and most likely were Republicans or members of whatever party claimed to be the voice of small business.

This scorecard no longer seems to helpful at all.

Now a populist in common vernacular is someone who hates immigrant workers, supports Trump, and isn’t sure what to do about the increasing power of women and minorities in public and private life.  A populist also is someone in this distorted definition who is not for the people, but mainly against this, that, and the other, and one of the big things they are against is outsiders, rather than hometowners.   I suspect what blurred every bright-line test was free flowing campaign contributions which are available to local pols in more ways from smaller, so-called community banks, and that don’t trickle down to them much from the big Wall Street and regional behemoth money center banks.  Call me cynical.

Now in an era that has been marked by wild abuses from banks that crashed the real estate market and most of the world’s economy, some of which is still being felt a decade later, politicians are arguing about how they can give banks more breaks.  Now when there is abundant evidence that banks have not only created a credit desert, but are also blatantly discriminating in city after city, community after community, politicians are arguing about how they can relax, rather than reinforce, regulations covering banks.

Reports now indicate a bill before the Senate is gaining support from some Democrats and splitting the caucus, particularly among some red-state Demos facing election, who are claiming that they need to help the smaller, community banks against the consolidating, greedy big banks of Wall Street and its suburbs around the country.  That almost sounds old school populist, until we come to understand that they want to help out about two dozen midsized banks from protective Dodd-Frank rules by raising the regulatory triggers from $50 billion in assets to $250 billion in assets.

I don’t want to seem unsympathetic to local, community financial institutions, but we’re not talking about credit unions here.  Since when is $50 billion in assets not a big bank, wherever it gets its mail?  If you are going to play in the street, even if it’s not Wall Street, you still have to be careful about not bumping into the curb when you make a turn.  Some campaign contributions shouldn’t buy you the ability to just speed on the roads willy-nilly without obeying the rules and remembering that passenger, customer and community safety comes first.

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Please enjoy Kacey Musgraves’s Slow Burn. Thanks to KABF.

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