Banking On The Postal Service

The Roosevelt Institute–named for FDR–has a project it calls “the next New Deal.” One of its recommendations takes a hard look at a proposal that has been floating around for a while–allowing the Post Office to offer banking services.

Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities, leaving marginalized Americans underserved and left behind in today’s economy. Without access to basic banking services, such as checking and savings accounts or small loans, consumers are vulnerable
to a host of financial abuses. To foster a more inclusive and accessible economy and society for all communities in the U.S., the public provision of banking goods and services by the government is an important— and bold—option to consider. In a new report co-published with the Samuel DuBois Cook Center on Social Equity at Duke University, Thomas Herndon and Mark Paul argue for the public provision of household financial services.

Among the referenced “host of abuses” are payday lenders and other predatory operations, offering money to people who are desperate for cash to meet a pressing and/or unexpected need at obscene rates of interest.

Allowing the Post Office to offer banking services would make those services available in locations that bank branches no longer serve, and would allow people with very limited means to access  basic financial tools that most of us take for granted: checking and savings accounts, check cashing services, and the ability to have direct deposit for Social Security and payroll checks.  The Post Office would also lend money–at reasonable rates–via small loans, auto loans, and mortgages.

As I noted, adding banking to the services the Post Office currently provides has been proposed before.  I always thought it was a good idea (although for some reason, the banks disagreed….)The Roosevelt proposal, however, adds an interesting argument to the case for Postal banking, one I had not previously encountered.

Roosevelt’s proposal for banking through the Postal Service argues that in addition to serving a growing public need, having a public bank would allow the federal government to monitor and manage the country’s online financial services marketplace.

This second component would serve as a powerful regulatory tool by allowing the government to condition sellers’ access to the marketplace based on certain consumer safety standards. Consumers could also rate and review sellers, fostering easier detection 
of consumer abuses. A public banking option structured with these two components would create the financial infrastructure required for universal service, while also preventing consumer financial protection abuses through public-private competition.

If we had an administration and Congress that was operating in the public interest, this proposal would at the very least get serious consideration. But of course, we don’t have a functioning government right now, let alone people in public office to whom we might affix the label “statesmen.”


  1. I received a lengthy study to review about public banking options from the Democracy Collaborative. As anyone with reasonable intelligence can expect, there will be another market crash, and the next one will be worst than the last.

    Einstein talked about the “business cycles” in his dictum. It’s never an if…only a matter of time. The stock market today is so hyper-inflated with FED cash (easy money) and tax cuts to corporations and billionaires, their fundamentals aren’t even a consideration.

    And now Trump is looking to cut taxes on investors to keep the mania going.

    Glass Steagall has been neutered so it’s only a matter of time. If it happens under Trump, don’t count on public banking options being approved. The progressive caucus might propose a bill, but the two corporate-owned political parties will shoot the proposal down while they bail out the banks and rush to cut benefits on senior citizens.

    Only the language used with voters are different between the GOP and DNC politicos. The donors are the same, and the benefactors of policy are the same. Obama proved it. Instead of doing the right thing, he threw Americans under the bus. If he would have restructured the banking system after charging the top CEOs with criminal activity, we’d never see Trump. If Obama would have installed a Medicare for All option instead of the insurance industry pick of Obamacare (previously Romneycare), then Trump wouldn’t be in the White House.

    Instead, Obama, owned by CitiGroup, did precisely what he was told to do like all good politicians.

    Only the younger Democratic Socialists who are kicking corporate DEM asses will implement a plan such as public banking.

    Keep your eye on New York’s governor race…Cuomo vs. Nixon. It’s between a progressive gay activist and a corrupt DEM. All the major DEM players have endorsed the corrupt DEM, of course.


    The DNC and all its affiliates endorse the status quo because wealthy donors and large corporations fund them. Our fight is in the primary races where we must vote for progressives over the corrupted wing of the democratic party. Just voting blue isn’t enough.

    If you need more proof, look at the deal Schumer cut with McConnell on lower court judges. SMDH

  2. My father was a postman during the 60’s. He often worked alone on the Texas & Pacific midnight train from Abilene to El Paso, sorting mail in the post car, with mail and packages destined throughout the west coast. On return home, he sorted mail destined for the east coast. He sensed change was coming that would challenge the core services of USPS. As a result of competition, the postal service has dramatically improved customer service. USPS is located in urban and rural communities where banks do not exist. Post Offices are already enabled with state of the art point of sale retail transactions. Authorizing some banking services would be good for current patrons of USPS, the men and women dedicated to the postal service system, and the opportunity to expand distribution of banking services would be good for our nation.

  3. Post office “handling” banking services seems threatening to me in the present political climate. I would suggest that a despotic dictator wannabe would love to have government control of private finances. When the planned coup is carried out, his/her likely first plan would be to have the military solidly armed and obedient, second to usurp public wealth, then to control the prison system, and on and on. This is certainly NOT what Democrat Roosevelt had in mind in spite of accusations.
    Just turn this over to the Republicans and watch for the “Final Solution”.
    Before it’s too late, VOTE November 6th to support the BLUE WAVE.

  4. Considering my local Post Office 46219 facility, location, parking area and traffic conditons; this doesn’t appear feasible. Would this add to the current USPS problems? Convenient postal drop boxes have been almost totally done away with, postal delivery service is problematic in a number of Indianapolis areas and, while I do support the USPS and do not mind the latest stamp increase, I do not see adding banking facilities as an advantage for the USPS, only for banks. I do not use ATM services but know there is a fee; would there also be a fee to cover the cost of banking in Post Offices?

    “Allowing the Post Office to offer banking services would make those services available in locations that bank branches no longer serve, and would allow people with very limited means to access basic financial tools that most of us take for granted: checking and savings accounts, check cashing services, and the ability to have direct deposit for Social Security and payroll checks. The Post Office would also lend money–at reasonable rates–via small loans, auto loans, and mortgages.”

    Supermarkets have utility payment services and most big-box stores provide money transfers; some have banking services. Postal service is having its own problems in this economy and especially with the current government; why dump more on a much needed facility already struggling to survive? Banks have plenty of money and are gouging depositors for more. I am in an ongoing and expanding situation with businesses all but demanding automatic payment deductions and learned through my bank that corporations process the electronic payments before mail-in check payments are processed increasing the possibility of late payment. I am one of many millions in this country whose income, through automatic deposits, cannot afford to have money arbitrarily removed from my checking – or savings – accounts when I have emergencies to pay for an need to juggle my payment schedule. This is a banking problem and there are already problems due to no regulations protecting depositors; I do not see adding problems to the USPS to help banks as anything but playing into the greedy hands of Corporate America…that 1% or 2% this blog speaks out against on a daily basis.

  5. In my neighborhood there are three banks; all are within walking distance from the post office. The check cashing/pay day loan place is over two miles away along Washington Street where there are no banks or post offices. Such a plan would not help this situation, and like Jo Ann, I see nothing but an added burden for our post offices.

  6. It might be easier and more logical to make wi-fi services available in every home and provide tools for on-line banking to areas that are under served.


  7. Todd @ 7:06 am, you are right on all points. Obama was in the right place at the right time to reform Wall Street and our Heath Care System after Bush the Younger. When he was first elected both Houses of Congress were controlled by Democrats.

    Bernie Sanders had the right idea when he ran for President.
    He said, Wall Street cannot continue to be an island unto itself, gambling trillions in risky financial decisions while expecting the public to bail it out. It is time to break up the largest financial institutions in the country.

    The six largest financial institutions in this country today hold assets equal to about 60% of the nation’s gross domestic product. These six banks issue more than two-thirds of all credit cards and over 35% of all mortgages. They control 95% of all derivatives and hold more than 40% of all bank deposits in the United States.

    If a bank is too big to fail, it is too big to exist.
    Sanders offered a path way to break-up the big banks. The so called “Experts” reacted as you would expect – Rob Blackwell is Washington bureau chief for American Banker, a trade publication for the financial services industry, Blackwell’s take on Sanders’s plan is that it’s “cuckoo.”
    Wells Fargo has had one scandal after another, creating a postal system bank will not correct Wells Fargo’s behavior. Jail time would be a strong deterrent for the banking crooksters, but you know Too Big to Fail, Too Big to Jail.

  8. If you visit small rural communities in Indiana or anywhere else in the country, especially in the western states, you would find few if any places to bank. There are very few local banks or credit unions, fewer still grocery stores that offer full banking services. You will find ATM machines occasionally, especially in corporate convenience stores at gas stations. Those do not offer full banking services in any meaningful way.

    Urban and suburban dwellers are at the mercy of the banks, whether dealing directly with them or through their surrogates at the check cashing outlets or the payday loan operations. Banks charge fees to cash checks, some even on their own checks(!). Walmart and other outlets also charge a fee for check cashing.

    Post offices have been the hub of very small communities across the country for decades. The technology is there to provide universal services to those under-served locations. Why not do testing in various locations to see if the system would work?

  9. An idea that benefits underserved, low income folks AND would provide the Federal government with a powerful banking regulatory tool — yeah, right!! And I’m also hoping for unicorns on Big Rock Candy Mountain!

  10. It was nice to hear about Einstein’s dictum. I was beginning to think we were forever obligated to hear about Trump’s dictum.

  11. I think postal banking is a good idea. Shame it will never happen. It would wildly undercut and destroy the payday lending industry – a group that (for some reason!) gives a lot of money to our friendly neighborhood officials to keep 1500% interest legal.

    It really is a good idea though.

  12. Peggy; I keep seeing this suggestion to provide everyone with wifi. What about people who do not have computers or cell phones because they don’t have the money? There are still many Americans living at poverty level who do not have bank accounts, who – IF they have a job and paycheck – use money orders to pay bills. Just as I continue refusing “paperless bill paying”, which may be convenient for banks and corporations, is NOT convenient for millions of others who must juggle bill paying. Businesses are supposed to provide the public with goods and services; it is getting closer and closer to the public serving the corporations. There are many who do not have cable TV; some do have land line phones IF they can afford the bills. Providing every home with wifi will only help those of us who have and use computers and cell phones (my son pays for my phone) but who is to ultimately pay for the service? Someone has to pay for it…”There is no free lunch.”…and corporations are in control today to make profits.

  13. Wow, I thought everyone would like this idea. You know, we use the post office here for one of our accounts. Spouse is an EU citizen so that allowed us to have a post office account because otherwise, they won’t take American’s accounts anymore. They don’t want our money. There are post office ATMs in every village and one is literally on the next block from our apartment. It’s cheaper than any other of the banks in town as most of them charge a minimum of 35 bucks a month to have your money with them. Thanks IRS, NOT.

    Now if we could just get them to deliver our priority mail from the states. My sister in law mailed our car title to us using priority mail and they told her 2 weeks to get here but it was flown over, overnight. It’s been 3 weeks and the tracking showed it cleared Zurich customs on Aug 20th. Still no sign of it and we’ve been the post office twice looking for it. I guess Fed X would have been better on that one. Never had that problem in the states. hmmmm

  14. Peggy, good call. We aren’t that far from a cashless virtual economy. Let’s not build more obsolescence.

    One of the things that strikes as a change in our culture that goes beyond the entertainment media cult is what really is extremism – the notion that there is one way to do things and I am in possession of it. I think that what marked President Obama’s terms was a (in turns out temporary) return to statesmanship and politics as an art in relationships. It would appear that for giving us that (final?) demonstration of what was and could be again his legacy will be tarnished by he didn’t ramrod through progressive policies (like the that was possible).

    We’ve accepted the extremist notion that revolution must replace evolution and goat like head butting is the order of the day. The guy with the thickest head wins.

    If we accept that I fear that the first casualty will be democracy.

  15. Todd and Monotonous are on point in their comments if a bit off subject. I was also disappointed when the Dems wouldn’t face the fire and simply enact Medicare for all and stomp on the heads of the bankers that caused the crash. A passel of RICO convictions (it WAS concerted activity) followed by a stronger Glass-Steagall would have given banks and bankers real religion and saved us from the next crash. There will be one. I believe this quote is often attributed rightly or wrongly to Mark Twain, “History doesn’t repeat itself, but it often rhymes,” and that is what will happen with the bankers. Greed has no bounds and these people choose to work with money for a reason–and it isn’t to share!

  16. Here’s one problem I see with that approach: DeVos is seeking to take away the protections instituted by the Obama Administration that forgave student loans made by predatory for-profit institutions that provided training, degrees and certificates that are basically worthless in the marketplace. Tuition and fees are higher than a real university, but these for-profits go after unsophisticated, vulnerable people seeking a better life. The Obama Administration went after some of these outfits to try to close them down. Student loan holders can file paperwork with the IRS to confiscate tax refunds, and from what I’ve been told, appeals are futile. (admittedly, no personal experience). The interest rates are predatory, and with compounding, many people will never live long enough to pay them off. They can also attach wages without going to court, and attach bank accounts and even Social Security retirement benefits. That’s why some people don’t have bank accounts and deal instead with check cashing outlets that only charge 1% of the face value to cash a check, and minimal charges for money orders. If the Post Office also becomes a bank, the Republicans will make it easier for the privateers to grab peoples’ money and they will have the added advantage of being able to use the Post Office to update current addresses of people they want to chase for money.

  17. Natacha – you and others are assuming that Trumpism is the future instead of an aberration. If the post office offered savings accounts, the charge to deposit a check would be 0%. Low cost savings accounts could be provided and even allow patrons to set up payments, with a built-in overdraft avoidance system.

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