Post Office Banking Could Be the Start of Something Big

Richard (RJ) Eskow • Huffington Post • February 6, 2014

It seems like an idea whose time has come. With one in four American households partially or entirely excluded from the current banking system, and with the U.S. Post Office in search of additional revenue, why not use the postal system to offer banking services to lower-income households?

In fact, this is an idea whose time has already come, more than once. Many nations — among them Great Britain, Japan, Germany, Israel, and Brazil — provide or have provided some form of postal banking services. So did the United States, until 1966.

It’s hardly a radical idea. The U.S. system was voted into law in 1910, during the presidency of William Howard Taft. In any case, a better way to describe it would be as a beginning.

What better way to start a much-needed transformation of our financial sector than by providing services to those communities the financial industry refers to as the “unbanked”? Right now those communities are routinely victimized by predatory payday lenders. As we first reported in 2010,

“Studies have shown that payday lenders disproportionately exploit minority neighborhoods with loans that are issued at an average annual interest rate of 455%. The average number of loan each borrower takes out is nine per year, according to one study, as these high rates lead to a cycle of indebtedness.”

Sen. Elizabeth Warren has endorsed the postal-banking concept, which David Dayen describes in more detail here. As Sen. Warren wrote recently, “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.”

The report that stimulated all this new discussion was written by the Post Office’s Inspector General, and it makes a compelling case.

Read the entire article here.

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A whole new pot of money for entrepreneurs? Time for a state-owned bank!

Ryan Davis • Herald Net • February 3, 2014

Could the legalization of marijuana in Washington create opportunities for small businesses to access a new source of capital investment?

Maybe something like this: Proposed legislation to create a Washington state-run public bank would provide a legal banking alternative for marijuana-related businesses and potentially a new source of credit for small businesses.

While our state voted to legalize marijuana in the past election, possession and distribution remains a federal offense. As a result, many banks will not accept cash deposits from dispensaries or other related businesses for fear of public seizure.

Recently the U.S. Department of Justice announced it was preparing new guidance that would allow state-legalized cannabis businesses to use federal banks. However, without a defined safe harbor or action from Congress, many may feel the risk outweighs the benefit.

A solution may be to create a public bank in the state to handle these deposits and provide banking services.

A public bank is a financial institution in which the state or public actors are owners. Advocates for public banking point to North Dakota as a policy model. As the state receives revenues from taxes and fees, rather than depositing those funds into a commercial bank, they are deposited at the Bank of North Dakota.

Read the entire article here.

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Montana Group says state-owned bank could help students, farmers

Jan Falstad • Missoulian • February 2, 2014

BILLINGS – The idea of setting up a state-owned bank in Montana to invest at home and offer low-interest loans to small businesses and farmers was debated last week in Billings.

A bill to set up a Montana bank modeled after the State Bank of North Dakota, set up 85 years ago, was tabled during the 2013 session of the Montana Legislature.

But members of the Montana Organizing Project and other participants informally decided Tuesday night to study the concept to see if it made sense to draft another bill for the 2015 legislative session.

Read the entire article here.

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Enough Is Enough: Fraud-Ridden Banks Are Not L.A.’s Only Option

Ellen Brown • truthdig • January 30, 2014

“L.A. relies on these banks,” says The Times, “for long-term financing to build bridges and restore lakes, and for short-term financing to pay the bills.” The editorial noted that a similar proposal brought in the fall of 2011 by then-Councilman Richard Alarcon, backed by Occupy L.A., was abandoned because it would have resulted in termination fees and higher interest payments by the city.

It seems that we must bow to our oppressors because we have no viable alternative – or do we? What if there is an alternative that would not only save the city money but would be a safer place to deposit its funds than in Wall Street banks?

There is a place where they don’t bow. Where they don’t park their assets on Wall Street and play the mega-bank game, and haven’t for almost 100 years. Where they escaped the 2008 banking crisis and have no government debt, the lowest foreclosure rate in the country, the lowest default rate on credit card debt, and the lowest unemployment rate. They also have the only publicly-owned bank.

The place is North Dakota, and their state-owned Bank of North Dakota (BND) is a model for Los Angeles and other cities, counties, and states.

Read the entire article here.

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Is Postal Banking Already Legal? Yes.

Matthew Yglesias • Slate • January 29, 2014

Many countries (including at one point the United States of America) do something called “postal banking” where, essentially, the local postal service offers some simple and basic financial services to the population.

Bringing a postal bank to the United States would basically address two issues. One is that it would create a kind of “public option” for simple banking services and perhaps drive check-cashing and payday-lending joints out of business. The other is that it would create an additional revenue stream for the USPS and specifically a revenue stream that would justify holding on to all its real-estate assets so they could serve as branches.

To me the public option part of the argument has always made more sense than the “Save the Postal Service” part of it. But a new white paper from the USPS inspector general alters that calculus in my view by arguing that the USPS already has statutory authority to do postal banking.

Read the entire article here.

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Prosperity For Main Street, Not Wall Street

Rudy Avizius & Mike Krauss • Youtube Channel Publicbankingtv • January 29, 2014

Our cities are not broke. They are struggling with onerous interest payments to Wall Street bankers who are nothing but middlemen. These interest payments impoverish your communities, while enriching Wall Street. This video shows how municipalities, counties, universities and states can significantly reduce their interest payments by creating their own public bank. This has already been done and proven, and could cut the costs of public projects by at least half.

 

Watch the video here.

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The Post Office Should Just Become a Bank: How Obama can save USPS and ding check-cashing joints

David Dayen • New Republic • January 28, 2014

One of the key messages of tonight’s State of the Union address will be President Obama’s willingness to bypass Congress to create jobs and reduce inequality. As luck would have it, yesterday a new government report detailed an innovation that would preserve one of the largest job creators in the country, save billions of dollars specifically for the poor, and develop the very ladders of opportunity that Obama has championed as of late. What’s more, this could apparently be accomplished without Congressional action, but merely through existing executive prerogatives.

What’s the policy? Letting the U.S. Postal Service (USPS) offer basic banking services to customers, like savings accounts, debit cards and even simple loans. The idea has been kicked around policy circles for years, but now it has a crucial new adherent: the USPS Inspector General, who endorsed the initiative in a comprehensive white paper.

Read the entire article here.

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Elizabeth Warren: Coming to a Post Office Near You: Loans You Can Trust?

Elizabeth Warren • Huffington Post • February 1, 2014

The poor pay more, and that’s one of the reasons people get trapped at the bottom of the economic ladder.

But it doesn’t have to be this way. In the same remarkable report this week, the OIG explored the possibility of the USPS offering basic banking services — bill paying, check cashing, small loans — to its customers. With post offices and postal workers already on the ground, 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.

Read the entire article here.

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