- In the late 80s I worked with a Franciscan community in the South Bronx. A major apostolate was a shelter for homeless men. Many of them had full time, low paying jobs. So why were they homeless? Because it took a lot of money to rent a room: a month’s rent, often another month’s rent, plus a security deposit. And it was hard for them to save money, as all the banks in the area required a $500 minimum deposit to open an account, and carrying around that much cash on the streets was not wise. So the friars began an informal banking service; they would hold on to the cash for the guys until they had enough to leave the shelter.
Now I read that my union is proposing something similar to help the Postal Service out of its financial crisis, which was provoked, not so much by the internet taking over communication as by the requirement to fund retirement benefits for people who have not even been born yet; we are funding 75 years in the future, something on other entity in private or government industry is required to do. Anyway:
“On July 27, 2012, the National Association of Letter Carriers adopted a resolution at their National Convention in Minneapolis to investigate establishing a postal banking system. The resolution noted that expanding postal services and developing new sources of revenue are important to the effort to save the public Post Office and preserve living-wage jobs; that many countries have a 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 bank accounts 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.’
The USPS has been declared insolvent, but it is not because it is inefficient (it has been self-funded throughout its history). It is because 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 also on the privatization chopping block, and its postal workers have also vowed to fight. Adding banking services is an internationally proven way to maintain post office solvency and profitability.
Many countries operate postal savings systems through their post offices, providing people 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 other activities to maintain its network. One effective solution has been to create or expand postal financial services.”
Read more here.