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PARALLEL UNIVERSE: Post Office Floats Idea of Offering Financial Services; Banks Hate Idea
NPR reported on Friday, Feb. 7, 2014 that the post office -- you know, those guys who never are late delivering our monthly electricity, cable TV and other bills -- could rack up billions by offering money services:
The NPR story cited a white paper from the inspector general of the USPS on the concept:
Postal banklike services are common in many countries around the world and work as efficiently as the U.S. postal savings plan did for decades, the NPR story noted.
Many people didn't trust banks in the Depression era before deposit insurance was offered in the Glass-Steagall financial regulation bill in 1933 (yes, that's the same bill that was repealed in 1999 during the Clinton Administration; FDIC, which insures bank deposits was retained from G-S, which was replaced with Gramm-Leach-Bliley).
Back in the day, post offices didn't offer very high interest rates on savings -- about the same as banks offer today -- but the system worked well, especially in small towns which were underserved by other financial institutions.
The NPR story noted that "More than a quarter of all Americans, some 68 million, are now underserved by banks — 'underbanked,' as the white paper from the Inspector General of the U.S. Postal Service calls them. They live in places where there are no bank branches, or just one. Many have to rely on check cashing outlets and payday loans, which often charge exorbitant fees."
The NPR story continues: "Betsy Cavendish, president of Appleseed Network, says being able to go to the post office for simple financial transactions would be 'win-win'. Many people are spending $2,500 a year or so in extra fees."
"They have a lack of options for small-dollar loans and too few savings vehicles. Meanwhile, the Postal Service is in every zip code in the country and could potentially offer needed financial services," she says.
Bottom line: I think we should provide more banking services; if you shop at Walmart, you'll notice that most of the stores have a bank inside the store; the same goes for my local H.E.B. supermarket, a big Texas chain based in San Antonio.
Banks should have nothing to fear from a postal savings system because the services offered would be limited to simple banklike tasks like cashing checks and providing savings accounts. I doubt that any postal savings plan would offer mortgages or other loans. That would be a bridge too far for banks!