Postal banking is finally a reality in the United States (some)
The Covid-19 pandemic has revealed that while we are all interconnected – through the air we breathe, our public health systems, the economy – government is largely absent from American life, leaving us to fend for ourselves as individuals in the so-called “Free market.”
The crisis has wreaked economic havoc on American workers. But American billionaires got 62 percent richer during the pandemic, while more 86 million Americans have lost their jobs, some 3 millions of homes are now reporting fears of impending eviction, and essential workers – especially Latino, indigenous and black workers – continue to die from Covid-19 at disproportionate rates.
The vaccines that now save hundreds of thousands of lives were developed through public research and funding. But the pharmaceutical companies that hold the patents on these vaccines are now refusing to share critical information with countries facing the devastating consequences of the pandemic. And in a number of states, officials have left deployment, testing and other essential services to businesses, pitting profit against public interest.
In other words, a privatized America is a divided, unequal and lonely place.
This is why a new experiment by the US Postal Service (USPS) to provide postal banking services is so remarkable. In September, the country’s most popular federal agency began offering paycheck cashing services at several post offices on the east coast – working with the American Postal Workers Union (APWU) and after been pushed by many community groups. Now anyone can redeem paychecks in Washington, DC, Baltimore, Maryland, Falls Church, Virginia, and the Bronx in New York in exchange for Visa gift cards up to $500. The postal agency plans to expand the program to bill payment services and ATMs in the future.
The role of APWU cannot be overstated. Along with financial reform, faith-based and community groups, the union launched the Postal Banking Campaign in 2015 and organized years of rallies and days of action to make the program a reality. APWU also negotiated delicately with postal service management to implement the pilot, as reported on American prospect.
By offering banking services, USPS chooses to use government to make a real difference in the lives of many Americans, rather than let us compete with ourselves in private markets. The Federal Deposit Insurance Corporation (FDIC) estimates that 7 million American households currently do not have a bank account and another 20 millions of people are underbanked, which means they have a bank account but depend on payday loans, check cashing services and other alternatives. Payday loans are notoriously predatory, with rates as high as 589 percent – and the industry often targets black and Latino communities. While the new program’s check-cashing fee – a fixed amount of $5.95 – is higher than it should be, it is lower than what some private companies charge, which can be up to $15 or more.
This approach isn’t exactly new – USPS actually offered postal banking services from 1911To 1967. During this period, the program provided a stable alternative to private banks, first for immigrants, then for white farmers during the Great Depression, then the wealthy in the 1940 s because they were looking for reasonable returns in the low interest economy of the day. The Lyndon B. Johnson administration ended it in an effort to streamline government.
Today more than 90 percent of post offices around the world provide financial services, making the United States a global outlier. Recent polls show that a strong majority of Democrats and
Republicans support postal banking. California Governor Gavin Newsom has just signed a bill to study a state-level public option for banking services such as debit cards.
We must demand that these pilot programs be extended to thousands of post offices across the country, both in cities and in rural areas. Full 69 percentage of census tracts with a post office – representing 60million people – do not have a community bank branch. People who live in these areas are either unbanked or rely on the big Wall Street banks prone to predatory tactics, like pushing credit cards, charging high fees, and even opening accounts without consumers knowing.
And we must strike back when the big banks and their ideological allies deliver secular – and inaccurate – critiques of postal banking. Ross Marchand of the Right-Wing Taxpayer Protection Alliance reacted to the news in the American banker pretending : “Lawmakers must face a raging government instead of calling for federal banks. Marchand asserted that “many companies’ offer free bank accounts with no minimum deposit requirement. But if it really is, then why isn’t one in four American households either banked or underbanked?
The truth is, the predatory lending industry targets vulnerable Americans, especially people of color. Blacks, for example, are about twice as likely as whites to live within a mile of a short-term, high-interest lender like a pawnshop or a payday lender.
Right-wing forces oppose postal banking because it threatens what is a multi-billion dollar industry with an interest in keeping poor, working Americans locked into debt cycles just to pay rent and rent. grocery store. For example, the Trump administration ended an Obama-era rule that required payday lenders to ensure borrowers can repay their loans when due.
The post office’s new program is a welcome start after years of pressure from postal workers, community groups and government officials, such as Sen. Bernie Sanders (I-Vt.) And Rep. Alexandria Ocasio-Cortez (D-NY), who presented postal banking legislation in 2019. It might sound drastic, but that’s only because Wall Street cronies and right-wing critics want us to believe it is. But postal banking is actually as American as apple pie – a public good that is paid for by all of us, serves all of us, and leaves no one behind.