Photo by Greg Nash
By Thomas M. Hanna and Jeff Olson, The Hill | October 9, 2020
Postal banking would offer a personal public banking option to everyone with a postal address
The U.S. Postal Service (USPS) is under attack and at grave risk. But with that many Americans are awakening to both the value of the USPS and the manifest dangers of privatization. The crisis has also sparked renewed interest in postal banking, a win-win approach that could both make the USPS more financially resilient and provide badly needed financial services to tens of millions of Americans.
Over the past several months, this constitutionally enshrined and highly-regarded public institution has been sabotaged from both within and without. On the one hand, it has largely been left to fend for itself amidst a global pandemic and economic crisis. Specifically, while corporations and private sector businesses have received hundreds of billions in public support, USPS’s request for support has thus far largely fallen on deaf ears in Congress. On the other, new Postmaster General Louis DeJoy (who is a major donor to President Trump) has overseen a raft of policy and operational changes (such as removing, dismantling and selling off mail sorting machines) that has contributed to deteriorating service quality and widespread accusations of politically-motivated meddling in the upcoming presidential election.
Moreover, these threats are not only linked to each other, they are also connected to a much longer effort to undermine the USPS, and public support for it, as a precursor to privatization and the wholesale transfer of valuable assets (especially real estate) to private hands. Most egregiously, in 2006 (during the Bush administration) Congress passed a law that required the USPS to pre-fund 75 years of its future retiree health care costs. As Sarah Anderson, Scott Klinger and Brian Wakam write, “this burden applies to no other federal agency or private corporation” and “if the costs of this retiree health care mandate were removed from the USPS financial statements, the Post Office would have reported operating profits in each of the last six years.”
Fortunately, across the country, people have been putting up signs in support of the USPS in their yards, buying stamps en masse, holding rallies and calling their representatives. Inside the USPS, postal workers have heroically resisted management’s efforts to dismantle their equipment and gut hallowed principles (such as not leaving mail behind), while legislators are holding hearings and ratcheting up their oversight of the agency.
It is in this context that more people are seriously examining postal banking as an option that strengthens the economic sustainability of the USPS and would be especially beneficial to lower-income people and those who live in banking deserts or are forced to rely on predatory payday lenders.
Earlier this year Sens. Kirsten Gillibrand (D-N.Y.) and Bernie Sanders (I-Vt.) introduced the Postal Banking Act, which would restore financial and banking services to post offices throughout the country for the first time since the 1960s. “Postal banking will help us bring the same equality of service the USPS has for mail delivery to the financial system,” Gillibrand and Sanders contend. “Putting a public, nonprofit bank in each of the Postal Service’s 30,000 locations will bring low-cost banking services to people of every income level everywhere from rural communities to inner cities.”
While Congress should pass the Postal Banking Act with haste, it seems unlikely to do so, especially in an election year. In the meantime, the USPS should press ahead with postal banking, which is likely within its current authority, starting with a pilot program (or programs). The House of Representatives recently passed an amendment to an appropriations bill that would provide $2 million in funding for such a pilot project, and the USPS’s 2016 contract with the American Postal Workers Union (APWU) required at least one postal banking pilot project to be launched within a year. The APWU has suggested three potential locations (Baltimore, Cleveland and New York City), but as of yet no such program has been initiated.
Instead, the USPS’s Trump-aligned leadership has opened preliminary discussions with JPMorgan Chase to allow the corporate financial giant to open its own ATMs in certain post office locations. That is not postal banking. This should be seen for what it is: an ideologically driven boondoggle intended to primarily benefit one of the most powerful financial corporations on the planet. It will likely exacerbate, rather than address, the deleterious effects of economic inequality, financialization and corporate concentration.
“From a financial inclusion standpoint, JPMorgan Chase’s proposal accomplishes nothing — except for giving an already large and powerful bank an unfair advantage,” Raúl Carrillo, a fellow at the Americans for Financial Reform Education Fund, writes. Similarly, postal banking expert Mehrsa Baradaran explains that “having a private middleman defeats the entire purpose of postal banking, which is a public bank competing against banks like JPMorgan Chase.”
In its place, the USPS should honor its commitments to its workers and begin a real postal banking pilot project that could pave the way towards a wider rollout. In addition to the cities suggested by the APWU, California stands out as a logical place to potentially test and refine the postal banking concept. In recent years, the state has become an epicenter of the burgeoning public banking movement in the United States and is home to a large and powerful grassroots public banking coalition, the California Public Banking Alliance (CPBA), for which one of us, Jeff Olson, is an organizer.
In 2019, the alliance was instrumental in securing state legislative passage of AB 857, which enables the creation of up to 10 local or regional public banks in the state. The APWU was among hundreds of labor, environmental, political and community groups (representing millions of state residents) that endorsed AB 857, and for their part, the alliance has expressed interest in advancing postal banking in the state as part of their larger campaign for public banking. “We are ready, willing, and able to collaborate with the unions and the USPS in establishing the first postal banks in fifty years,” CPBA’s Susan Harman states.
Regardless of the results of the upcoming presidential election, threats to the USPS are likely to remain unless we translate renewed public concern for this vital public service into structural and legislative changes that will guarantee its long-term viability. Chief among these changes is postal banking, and activists in California and around the country are standing ready to move this exciting and important concept into practice.
Thomas M. Hanna is research director at The Democracy Collaborative. Jeff Olson is an organizer with the California Public Banking Alliance and the leader of PublicBankSD, based in San Diego.