“Why We Need a Bank at the Post Office”
Senator Elizabeth Warren points out that reviving this old institution would provide basic services to millions of underserved Americans.
Elizabeth Warren is not running for president. But she is doing what a candidate for president should: focusing attention on smart proposals to address challenges that for too long have been neglected, or actually made worse, by policy-makers.
Case in point: Warren’s postal banking proposal. “If the Postal Service offered basic banking services—nothing fancy, just basic bill paying, check cashing and small-dollar loans—then it could provide affordable financial services for underserved families, and, at the same time, shore up its own financial footing,” says the senator from Massachusetts.
She’s right. It really is possible to do two good things at once: address the abuse of the working poor by payday-loan and check-cashing outfits while expanding the range of services provided by the USPS. Media outlets have called Warren’s proposal “radical.” That’s ludicrous. She’s simply using her position and prominence to highlight the findings of a new study by the Postal Service’s Office of the Inspector General, which notes that roughly 68 million Americans are underserved by the private banking system. “With post offices and postal workers already on the ground,” says Warren, “USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods.”
This is not a new idea. From 1911 to 1967, the Postal Service maintained its own banking system, allowing citizens to open small savings accounts at local post offices—actually a better approach than “partnering” with banks. The system was so successful that after World War II, it had a balance of $3 billion, roughly $30 billion in today’s dollars. Congress did away with postal banking in the 1960s, but post offices in other countries—including Japan, Germany, China and South Korea—provide banking services. Japan Post Bank is consistently ranked as one of the world’s largest financial institutions based on assets.
That common global understanding of the usefulness of postal banking should be restored in the United States. It is best outlined in a United Nations Department of Economic and Social Affairs discussion paper, which observes, “The essential characteristic distinguishing postal financial services from the private banking sector is the obligation and capacity of the postal system to serve the entire spectrum of the national population, unlike conventional private banks, which allocate their institutional resources to service the sectors of the population they deem most profitable.”
When The Nation started writing about postal banking in 2010, the National League of Postmasters was toying with the idea, as were policy analysts who recognized that a public or quasi-public alternative to big banking could provide financial security for millions of Americans. It would also avoid investing entanglements that foster indebtedness to foreign governments and financial institutions, and perhaps create a way to fund public assets such as sewer systems and bridges.
Postal banking has since gained traction with postal unions, which have been fighting to save the USPS—both by easing irresponsible congressional requirements for pre-payment of retiree benefits seventy-five years into the future and by expanding the range of services that post offices provide. In 2012, delegates to the National Association of Letter Carriers convention backed a resolution that declared, “A USPS bank would offer a ‘public option’ for banking.” The new president of the American Postal Workers Union, Mark Dimondstein, wants the USPS to provide “a nonprofit alternative to the big banks” that “would give the working poor an alternative to the legal loan-sharking they are now victimized by. It also would provide another source of revenue.”
The voices of those who have been working for years to preserve the Postal Service from the privatizers, and to renew its essential promise, will be amplified now by the voice of Elizabeth Warren, along with those of Senator Bernie Sanders, Representative Peter DeFazio and other battlers of austerity and assaults on basic services. Warren’s a USPS defender but, more important, she’s promoting a vision of the nation’s network of post offices as a valuable asset that should be used to address not just communications challenges but issues of inequality and economic injustice. “We need innovative ways to create pathways for struggling families to build economic security, and this is an idea that falls in that category,” the senator says.
Plenty of progressives would like Warren to become a presidential contender. But ideas matter as much as candidacies. By highlighting this one, Warren is providing a sense of the kinds of issues—and the kinds of creative responses to economic and social challenges—that ought to be debated by those who would lead the country.