One of the more innovative solutions for America’s underbanked is to use the existing postal infrastructure to provide basic banking services, it would be allow lower income Americans to have easy and safe access to bank services while keeping them away from financial predators such as payday lenders. The concept was discussed in a recent report by the Inspector General of the Post Office and is being championed by Senator Elizabeth Warren.
Postal banking is a proven concept with programs already working in the United Kingdom, Germany, and Japan. It even existed at one point in the United States. Instituting (or rather re-instituting) postal banking is not only a great way to provide underbanked Americans with a useful service, it would also help financially secure the US Postal Service which is still struggling to cope with the emergence of email and private package delivery services.
And now the time is perfect for President Obama to implement postal banking thanks to a majority of vacancies on the US Postal Service’s Board of Governors which could order the implementation of postal banking. David Dayen explains:
Obama could fill the vacancies and restore a Democratic majority (by law, no more than five members of the board must come from one party, but with five vacancies to work with, he can certainly establish a majority).In addition, Barnett’s term has already expired, and Giuliano and Williams’s terms expire in December. So Obama could remake this board with members more favorable to a truly innovative agenda for the Postal Service that includes non-bank financial services. And since board members serve seven-year terms, they would be insulated from political shifts through the next presidential term.
For those five appointees on the nine member board President Obama could appoint people favoring a return to postal banking. That majority on the board could then, with the IG report to back them up, design and implement a 21st century postal banking system. Given models already exist in some of the world’s largest economies – UK, Germany, and Japan – there should be no serious difficulty.
Currently the four appointees are George W. Bush holdovers, Obama has yet to appoint anyone.
In effect, you have a Republican majority controlling an executive agency under a Democratic president, which happens to be the country’s second-largest civilian employer, behind Walmart. The loss of over 125,000 postal jobs has had a detrimental effect on employment, and the resistance to ideas like postal banking prevents low-wage communities from an alternative to payday lenders, check-cashing stores and other unscrupulous operators. Yet the White House has shown no urgency in reversing the conservative governing ideology at the Postal Service. If nothing else, there’s an economic imperative for the White House to act. They claim to want to reduce inequality through executive action. Postal banking is a major opportunity to do so.
It’s a proven concept that will save middle class jobs and provide valuable services to under-served communities and the power to make it happen is in the president’s hands. A report by the Inspector General of the Post Office has already studied the issue and shown how it could be implemented.
Are there any excuses left for President Obama not to do this?
Photo by White House under public domain.