Post office – Pilant's Business Ethics Blog

Let’s Have Post Office Banking!

The present system has failed the poor and those living paycheck to paycheck (often the same group). Millions of people pay exorbitant fees for cashing checks and short term loans for family emergencies. We can end that right now by using the Post Office as a bank.

Why is this an issue for me, business ethics writer? It’s very simple. The conflict here is between human intelligence and neo-liberalism. For the neo-liberal, it is obvious that the free market is always better than anything else. For me, evidence should be used to decided what works and what options society should choose to solve its problems. The current banking system and payday loan industry have failed and failed spectacularly in taking care of the needs of a great part of our people.

If there is anything I write about consistently, it is the need to use intelligent, reasoned decision making. Doctrinal rules like the idea that the free market is always best are better used in the world of religion.

I’ll go with the facts.

James Pilant

Return to Lender: Postal Banking Can Bring Equity to Communities | Michelle Chen

Your friendly local post office may have an honorable history, but it’s facing tough times, including a fiscal crisis and, more generally, a struggle to keep pace with growing digital communication technologies. Conservatives have increasingly dismissed the United States Postal Service as a clunky relic of old-fashioned America, with right-wing lawmakers seeking to phase it out through service cuts and privatization. Now, some progressives are trying to save the USPS by rebranding it as a financial vehicle: a place for you to pick up your mail and deposit a paycheck in one stop.

Some officials have pitched the idea of the postal service expanding into “non-bank” financial services, carefully designed to complement rather than directly compete with Wall Street. In a recent white paper, the USPS Inspector General’s office suggested that local post offices could offer products such as international money transfers, small short-term loans, and prepaid debit cards for bills or everyday purchases. To fulfill needs unmet by big banks, these financial services would ideally be targeted toward “low-income areas like rural communities and inner cities.”

Ultimately, though, many advocates want to see the postal service be bolder and actually delve into full-scale banking services. Labor and consumer advocacy groups like AppleSeed say the USPS is excellently positioned as a government-supported, publicly accountable institution to fill a longstanding gap in the financial system by offering interest-bearing accounts and other basic banking services. In addition, branching into the affordable finance business would offer the USPS a steady revenue stream.

For free-marketers who fear the USPS would steal big banks’ customers, advocates point out that low-income groups that stand to gain the most from postal banking have already been marginalized as a bad business prospect. Some 68 million Americans are considered “underbanked”: In other words, they lack access to mainstream banks and essential services like savings accounts. “Banking desert” neighborhoods are typically full of people of color, immigrants and unemployed workers — and there may be no full-service bank in sight for them, because massive firms like Merrill Lynch do not see those areas as “profitable.”

via Return to Lender: Postal Banking Can Bring Equity to Communities | Michelle Chen.

From around the web.

From the web site, Your Postal Blog.

http://yourpostalblog.wordpress.com/2013/12/30/banking-with-usps/

USPS is one of the most trusted organizations in the United States. Its reputation and world-class services are well known, and its customers know that there is no better value for their shipping solutions than their local Post Office. Reintegrating banking services into the Postal Service could have the effect of increasing its revenue base from financial services while simultaneously expanding its mailing business from increased foot traffic in its local branches.

The endeavor wouldn’t be a quick solution to increasing postal revenue as there are many infrastructure enhancements and procedures to establish to ensure necessary financial rules and regulations are followed. Still, the long-term prospects of a renewed Postal Savings System could be lucrative enough to reestablish the once thriving service.

A Post Office Bank?

How to save the USPS – Salon.com

How bad have things gotten for America’s national mail delivery system? The US Postal Service lost $1.3 billion last quarter, and this was regarded as good news. The venerable agency has been saddled with significant financial problems since a 2006 law forced it to pre-fund 75 years of employee retirement benefits, something no other public agency or private company has to do. This cash crunch (the Postal Service gets no money from the federal government and must survive on the revenues it generates) has led to austerity measures for the nation’s second-largest employer (right behind Wal-Mart). Mass layoffs last year were followed, earlier this month, by the announcement that Saturday deliveries of first-class mail will cease come August.

As many have noted, this is a largely manufactured crisis. Simply relaxing the pre-funding requirement—as the postmaster general beseeched Congress to do this week—would wipe out virtually all of the Postal Service’s deficit. (Absent this heavy payment, the agency would have made $100 million in the last quarter.) But given the reduced use of letters in an age of digital communication, it’s nonetheless true that the Postal Service is due for some changes to its business model. Democrats from Sen. Tom Carper to Rep. Elijah Cummings have laid out various ideas. But there’s one idea they haven’t suggested that would kill two birds with one stone: make money for the Postal Service and level the financial playing field for some of the most vulnerable Americans. Namely: We should allow the Postal Service to return to the practice of offering simple banking services.

According to the FDIC’s 2011 National Survey, over 10 million US households are “unbanked,” with no access to the financial system. Another 24 million households are “underbanked,” meaning they have a bank account but they also rely on providers of “alternative financial services”: remittance or money order shops, payday lenders, check-cashing operations, pawn shops, or associated services. Many of these services are among the most unscrupulous in American society, preying on people with few other options and charging usurious interest rates or carving out large fees. These roughly 68 million unbanked or underbanked Americans represent a huge market for non-bank financial predators.

How to save the USPS – Salon.com

Why is Congress strangling the postal service? The most likely reason is to give up the postal service’s function to private companies. The destruction of this public service will add riches to certain firms. I don’t think I need to name any names. You know the names of the companies as well as I do.

This kind of greed can drive you to despair. A public service with a history of success duplicated by other countries around the world is being dismantled to make a few Americans richer.

Privatizing successful public functions and then destroying or exploiting them to the fullest for maximum profit has become an American preoccupation. A vicious outgrowth of Friedman economics, it’s predator capitalism at its worst.

Can any of this be stopped? I don’t know if there is the public will particularly with the enormous money thrown into the equation by Citizens United.

Public minded human beings are hardly significant compared to that kind of money.

James Pilant

From around the web –

From the web site, Center for Financial Inclusion (Nigeria):

Opening a new bank branch is expensive. It requires a substantive up-front investment, and to stay open, the institution has to maintain an ample volume of business. This poses a challenge when trying to reach the financially excluded – many of whom live in relatively remote rural areas, and many of whom don’t have financial needs that draw a high volume of banking transactions. Mobile money is one way to mitigate this cost of bricks and mortar. But it is not the only way.

In pursuing financial inclusion, more and more countries are turning to the post office to offer on-the-spot financial services. Using this preexisting network, financial institutions are teaming up with postal services, outfitting the post offices so that they can conduct financial transactions, and training postal employees. Post office banking is only one variation of agent banking, which is increasingly practiced around the world, turning supermarkets, convenience stores, pharmaceutical retailers, and even lottery outlets into banking outlets.

From the web site, Your Postal Blog:

PostFinance, the banking arm of Swiss Post, may soon be spinning off from its parent company in the summer of 2013. However, independence from the Post won’t place it on the same playing field with other banks in the industry, as certain restrictions still apply.

When PostFinance begins life as its own separate entity, Swiss Post will still, technically, own it. The Post will own all shares of the financial institution when it ventures out on its own. This places ownership of the bank squarely in the hands of the Swiss government, as they own the Post Office.

As a state owned entity, PostFinance will continue to be subject to restrictions that prevent it from engaging in certain competitive activities that could take business away from existing banks. This limitation is welcome news to competing banks, but that insulation may not last indefinitely.

And from the web site, Dandelion Salad:

Neither rain nor sleet nor snow may have stopped the Pony Express, but the nation’s oldest and second largest employer is now under attack. Claiming the Postal Service is bankrupt, critics are pushing legislation that would defuse the postal crisis by breaking the backs of the postal workers’ unions and mandating widespread layoffs. But the “crisis” is an artificial one, created by Congress itself.

In 2006, Congress passed the Postal Accountability Enhancement Act (PAEA), which forced the USPS to put aside billions of dollars to pay for the health benefits of employees, many of whomhadn’t even been hired yet. Over a mere 10 year period, the USPS was required to prefund its future health care benefit payments to retirees for the next 75 years, something no other government or private corporation is required to do. As consumer advocate Ralph Nader observed, if PAEA had never been enacted, USPS would now be facing a $1.5 billion surplus.