On July 27, 2012, the National
Association of Letter Carriers adopted a resolution at their National
Convention in Minneapolis to investigate the establishment of a postal banking
system. The resolution noted that
expanding postal services and developing new sources of revenue are important
components of any effort to save the public Post Office and preserve
living-wage jobs; that many countries have a long and successful history of
postal banking, including Germany, France, Italy, Japan, and the United States itself;
and that postal banks could serve the 9 million
people who don't have a bank account and the 21 million who use usurious check
cashers, giving low-income people access to a safe banking system. "A USPS bank would offer a "public
option' for banking," concluded the resolution, "providing basic checking and
savings -- and no complex financial wheeling and dealing."
What is
bankrupting the USPS is not that it is inefficient. It has been self-funded throughout its
history. But in 2006, Congress required it
to prefund postal retiree health benefits for 75 years into the future, an
onerous burden no other public or private company is required to carry. The USPS has evidently been targeted by a
plutocratic Congress bent on destroying the most powerful unions and
privatizing all public services, including education. Britain's 150-year-old postal service is on
the privatization chopping block for the same reason, and its postal
workers have also vowed to fight. Adding
banking services is an internationally tested and proven way to maintain post
office solvency and profitability.
Serving an
Underserved Market Without Going Broke
Many countries operate postal
savings systems through their post offices, providing depositors
without access to banks a safe, convenient way to save. Great Britain first offered this arrangement
in 1861. It was wildly popular,
attracting over 600,000 accounts and -8.2 million in deposits in its first five
years. By 1927, there were twelve million accounts--one in four Britons--with
-283 million on deposit.
Other postal banks followed. They were popular because they serviced a
huge untapped market--the unbanked and underbanked. According
to a Discussion Paper of the United Nations Department of Economic and
Social Affairs:
The essential
characteristic distinguishing postal financial services from the private
banking sector is the obligation and capacity of the postal system to serve the
entire spectrum of the national population, unlike conventional private banks
which allocate their institutional resources to service the sectors of the
population they deem most profitable.
Serving the unbanked and underbanked may sound like a losing
proposition, but numerous precedents show that postal savings banks serving
low-income and rural populations can be quite profitable. (See below.)
In many countries, according to the UN
Paper, banking revenues are actually crucial to maintaining the profitability
of their postal network. Letter delivery
generates losses and often requires cross-subsidies from the post's other
activities in order to maintain its network. One effective solution has been to create or
expand the role of postal financial services.
One reason public
postal banks are profitable is that their costs are low: the infrastructure is
already built and available, advertising costs are minimal, and government-owned
banks do not award their management extravagant bonuses or commissions that drain
profits away. Rather, profits return to
the government and the people.
Profits also return to the government in another way:
money that comes out from under mattresses and gets deposited in savings accounts
can be used to purchase government bonds.
In Japan, for example, Japan Post Bank is the holder of fully one-fifth
of the national debt. The government has
its own captive government lender, servicing the debt at low interest rates
without risking the vagaries of the international bond market. Fully 95%
of Japan's national debt is held domestically in one way or another. That helps explain how Japan can have the
worst debt-to-GDP ratio of any major country and still maintain its standing as
the
world's largest creditor. If you owe the money to yourself, it's not
really a debt.
Some Examples of Successful Public Postal Banks
Kiwibank:
New Zealand's profitable
postal bank had a return on equity of 11.7% in the second half of 2011,
with net profits almost trebling. It is the only
New Zealand bank able to compete with the big four Australian banks that
dominate the New Zealand financial sector.
In fact, Kiwibank
was set up for that purpose. When the New
Zealand postal banks were instituted in 2002, it was not to save the post
office but to save New Zealand families and small businesses from big-bank
predators. By 2001, Australian mega-banks controlled some 80% of New Zealand's
retail banking. Profits went abroad and were maximized by closing less
profitable branches, especially in rural areas. The result was to place hardships
on many New Zealand families and small businesses.
The New Zealand
government decided to launch a state-owned bank that would compete with the
Aussie banks. To keep costs low while still providing services in communities
throughout New Zealand, the planning team opened bank branches in post offices,
establishing Kiwibank as a subsidiary of the government-owned New Zealand Post.
Suddenly,
New Zealanders had a choice in banking. In an early version of the "move your
money" campaign, 500,000 customers transferred their deposits to public postal
banks in Kiwibank's first five years--this in a country of only 4 million
people. Kiwibank consistently earns the
nation's highest customer satisfaction ratings, forcing the Australia-owned
banks to improve their service in order to compete.
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