Wednesday, October 21, 2015

Bernie Sanders proposes postal banking and it makes sense

I love it. I'm a big fan of public banking, so when Bernie Sanders introduced a bill to empower the Post Office to run a public banking system for the very poor, this makes him even more appealing as president. Of course, the private banks would be furious if this ever got a chance to become reality. A public banking system run by the post office would make them an unassailable competitor. But it would go far to eliminate the predatory practices that the private banking system has been escalating on the poor for decades.

Sanders says that big banks don't want the poor. So the poor have to go to payday loan businesses to get their basic banking done. They get their checks cashed but pay a stiff fee to do it. If they want a loan, they see very high interest rates, but they get their loans. I know, I've seen them. We have them in Utah like California has liquor stores. There is a payday loan place on just about every corner of Redwood Road and State Street. Except near the capital. That's too close to home.

The Atlantic is running a great article on the concept and rightly notes that "postal banking" is popular around the world. The only reason we don't do it here is that our Congress is regulated by the banks. See, the private banks are run by shareholders and hey, don't you know that 50% of the outstanding securities like stocks are owned by the 1%? They're driving the high costs of banking in their quest for profits. But the Atlantic article notes that the Post Office can run banking services at cost, and that might actually make private banks more honest. Now there's a concept.

There is a conservative wing of Congress that has been doing everything in their power to make the Post Office go broke. They're big fans of something called "privatization". Here's how it works. First they cut funding gradually over time.Then they point to how the agency is failing to perform it's mission. Then they propose to eliminate it entirely and let private enterprise do it.

Unfortunately for the arch-enemies of the Post Office, there is a Constitutional mandate for a post office and post roads. Even the framers of the Constitution recognized a need for a mail delivery service that is not owned by private, profit seeking individuals. Now it's clear that the Constitution grants the power to establish a post office and roads, but it doesn't require Congress to do it. I'm sure there is some Conservative member of Congress hanging on this observation in his quest to hand over all of our mail delivery services to UPS and FedEx. You know, just in case they might want to contribute to his campaign fund.

Congress has been doing everything to show how inefficient and lazy the Post Office is, when in fact, they're doing just fine. So if they can't defund it to the point of breaking it, then they lard it up with burdens they'd never impose upon private businesses. The most interesting example is the benefit funding requirement. The Post Office is required to fund it's health care benefits out to 75 years. Nobody in the la-la land of private banking has to do that, much less the rest of the world. As the inspector general of the post office notes, they've got it covered and they will finish the job soon. But that requirement is putting the post office in debt.

If the post office can managed to sock away more than $330 billion just to meet pension funding mandates, then surely they can operate a postal banking system. The best part about this health care fund is that it won't be robbed by someone like Mitt Romney because the post office can't be bought in a leveraged buyout. The health care benefit funding mandate makes the case that the post office is here to stay, and is secure enough to provide postal banking services for everyone who wants to use them. Indefinitely.

Bernie's proposal not only makes sense, it would save the Post Office, giving it new purpose and meaning, and it would help us catch up with the rest of the world.
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