US Postal Service Inspector General Proposes Launching Low-Fee Public Bank


JESSICA DESVARIEUX: Welcome to The Real News
Network. I’m Jessica Desvarieux in Baltimore. The inspector general of the U.S. Postal Service
released a white paper in January that proposes the post office provide basic banking services.
The proposal gained widespread attention after it was endorsed by Senator Elizabeth Warren. Now joining us to discuss all of this is our
guest, Mike Konczal. Mike is a fellow with the Roosevelt Institute, where he works on
financial reform, unemployment, inequality, and a progressive vision of the economy. Thanks for joining us, Mike. MIKE KONCZAL: Thanks for having me. DESVARIEUX: So, Mike, can you just provide
for us an outline of how the Postal Service can offer basic banking services? And who
would it serve, really? KONCZAL: Absolutely. So right now there’s
roughly 10 million Americans who have no formal banking account, checking or savings account,
and there’s about–a huge number, I mean, about 50 or 60 million, which is, to put it
in context, about one in four households who are under-banked, which have a very precarious
situation with banks. And, you know, you need banks to get, you know, checks cashed, to
get new checks, to, you know, engage in basic financial services. Now, historically, the post offices, you know,
for much of the 20th century offered basic banking services. Also, many countries internationally,
especially OECD countries, countries in Europe, tend to have banks in their country. The postal
services offer basic banking services. So what the post office proposed is it could
do one of a couple of different things. One is that could it offer something called a
postal card, which is, you know, like, a nice little joke, but the actual consequences would
not be funny. They would be, actually, very serious. You know, the post office could offer
people a basic debit card, which could be topped off with money, which would have low
fees and good consumer protections, and that you could use to, you know, cash checks to
purchase things, to pay bills. They also offer proposals where they could perhaps engage
in short-term loans like a credit card and so on and so forth. So it’s a very interesting
proposal which I think could do a lot of good work as a public policy mechanism. DESVARIEUX: Alright. And the government already
has sort of a program already like that with debit cards to recipients of Social Security
and federal disability, and it’s called Direct Express. Mike, can you just speak to how does
Direct Express work, and how does it differ from similar services provided by private
banks? Has the program at all been successful? KONCZAL: Sure. So I wrote a piece for Al Jazeera
America just recently about the Direct Express program, which tried to argue that, you know,
there’s often been public options like this in banking, where the government, you know,
instead of just the free market determining what kind of services people get, or even
a weird system of regulations that often don’t work very well, the government goes out and
directly ensures that people have access to safe and affordable banking products. And
the biggest case of this is a program that started in 2008 called Direct Express, which
is essentially a debit card. It’s issued by a private bank called Comerica. But the Treasury went to Comerica and they
had an open bidding process, which Comerica won, and said, you know, we want to offer
debit cards for people who are on Social Security, who are on disability, and who are on certain
other federal benefit programs, and we want to make sure that they can get their money
without having to go through check cashing or payday loans or other places that offer
really high predatory fees and have very unstable banking practices. You know, we want to make
sure people essentially have access to decent banking services. So Comerica came up with a schedule that was
a fee schedule, or, essentially, a fee structure, that was very strong. They were able to do
this because Treasury was–instead of each person going out in the market and trying
to get their own best offer, Treasury essentially bargained for 5 million people and said, we
have this, you know, 5 million people who really need banking services, and we will
work hard, you know, we will make sure that these payments go through. So, you know, the program has very high favorable
rates. Like, 90, 95 percent of people on the program enjoy it or recommend it to other
people, which is sort of unheard of. And it’s miles beyond what many of these people who
are, you know, poor or have, you know, very, very precarious economic situations were able
to get on their own on the private market. DESVARIEUX: So if I’m Bank of America or,
I don’t know, Chase Bank and I’m hearing this and this option of having debit cards through
the government, I’d be a little concerned, ’cause this is competition, isn’t it? KONCZAL: Absolutely. And, you know, a lot
of the major banks, a lot of the big-name banks that have really nice buildings and
very, you know, solid reputations are often the same corporate structure as a lot of the
payday lenders, a lot of the check-cashing places, a lot of the places that have kind
of sprout up in very poor communities. So even if not necessarily the fancy part of
the corporate structure that does all the high-end banking or investment banking might
not be directly affected, there’s some part of it that would actually–you know, that
profits off all this poverty. You know, there’s a really high cost of being
poor in this country, and doing things like–and as the post office pointed out, you know,
a lot of people getting by on $15,000 or $20,000 a year will spend 10 percent of their income
accessing financial services, which is outrageous, given the precarity and the lack of savings
that a lot of these households have. So there’s a very useful and positive role. Also, with the government kind of setting
a lower standard by saying, here is a debit card we will ensure people get, it moves businesses
from having a business model where their goal is to kind of see what they can suck out of
people, like, and see what they can kind of rip people off or be very predatory, towards
a better business model where they’re like, so how do we actually deliver real goods and
services, customer service, good values, as opposed to this kind of low-road, predatory
model. DESVARIEUX: Alright. Mike Konczal, fellow
at Roosevelt Institute, thank you so much for joining us. KONCZAL: Thank you for your time. DESVARIEUX: And, of course, as you know, you
can get the latest at The Real News. Follow us on Twitter @therealnews. And you can also
send me questions and comments @Jessica_Reports. Thank you so much for joining us on The Real
News Network.

23 comments on “US Postal Service Inspector General Proposes Launching Low-Fee Public Bank”

  1. gotama420 says:

    cool ii hope it comes to pass

  2. lsk464 says:

    Competition to the banks, never gonna happen.

  3. mad dusa says:

    good idea, but isn't the post office incompetent?

  4. thatsnotagoodidea says:

    Just join a credit union. Banks are no longer needed in the modern economy. 

  5. NowRenaissanceGroup says:

    #DefundAmerica the problem is the usa. If you people haven't noticed the post office is going private, not to say public works, work in this country; they don't. The real news, being downtown baltimore, next to their version of skid row and a couple blocks from the central militarized post office, thats attempting to function like fedex.

  6. planBdeveloper says:

    Are you kidding me??? The Post Office is Bankrupt. This is just a plan to help them out of debt.

  7. Shawn H Corey says:

    poor + capital = middle class

    The gov't has to provide the capital because private industry will only gouge the poor.

  8. Al Olmstead says:

    This is a preparation for an alternative to deliberately crashed private banks. The devil will be in the details of currency: fiat or backed?

  9. Gordon Bradley says:

    The UK ROYAL MAIL operated just such a bank called the GIRO BANK. It was very popular and successful. Thatcher abolished it. Her herd of pigs couldn't make money out of it !

  10. Gordon Bradley says:

    The UK ROYAL MAIL operated the NATIONAL GIRO BANK for years. It was very popular and successful. Thatcher kicked it to death because her herd of pigs couldn't make profits out of it !

  11. CandyAssCommie says:

    Best idea I have heard in a long time! This should happen!

  12. Napoleon Einstein says:

    Beware ! Mission creep. Just what we need, another government program.

  13. Gwhiz Ctheworld says:

    Mike is a UGLY bald human with a melon head….

  14. Glacier Don says:

    The post office can't even handle the mail. He can't be serious…… SMH

  15. howiwatchvideos says:

    Everyone I come across that works for the post office seem like lazy pieces of shit.
     It probably wasn't like that in the beginning. Affirmative action kicked in and so came the "I cant be fired attitude." Imagine trying to settle any type of banking dispute with the post office, no thanks.
     

  16. evilsoda00 says:

    Are we talking about the same postal service that charges you a fee to get your money back for the money order that THEY lost in the mail? 

  17. kd1s says:

    Actually I think the USPS should offer full raft banking services. Think about this, heavily regulated and available everywhere. Savings, checking, debit, credit. Home loans, car loans – the whole nine yards. Whatever interest gained would revert to a quasi-public post office. 

  18. sheltercrow says:

    Actually it's called "Providing Non-Bank Financial Services for the Underserved." That's "Non-Bank" not "Banking." Wait till the senators get through with the regulations. It will be just another banking predator.

  19. clearasvodka says:

    It doesn't matter as long as they are using Federal Reserve Notes for the proposed bank.  They still have to go to the discount window at the Fed and borrow money into existence.  Debt based monetary system.  Who cares if it is a low fee bank.  The money is still backed by nothing but phony paper bonds created out of thin air.  Now, a public bank with alternative currencies and gold/silver backing?  That's an idea worth talking about.  Anything less is just the same system that doesn't work. 

  20. Beta K says:

    Anytime a group of extremely wealthy individuals take over the government, they will underfund and destroy what belongs to the people and replace it with the mechanisms of their ability to control and direct the wealth of a nation toward themselves. 

  21. Sirellyn Y says:

    US Postal service. We'll take care of your money as well as we take care of your mail, and our own finances.

  22. Glacier Don says:

    I live in NYC bitch and I work in an industry that relies heavily on USPS and I see the mishandling of mail on a daily basis. I actually have to do reports on the packages they lose.

  23. fliteshare says:

    ING (postbank) started as post-office chequeing service 50 years ago. ING is now amongst the largest global banks.

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