business news in context, analysis with attitude

by Kevin Coupe

The Los Aneles Times had a piece the other day about how Sen Kirsten Gillibrand (D-New York) has introduced a bill that would create a Postal Bank, essentially allowing the US Postal Service to offer checking and savings accounts, as well as low-interest, short-term loans.

The three advantages of such an entity:

• “It would be cool having an alternative to private banks that all too often prove themselves no friend of customers (hi, Wells Fargo!).”

• “Banking services would be a financial lifeline for the U.S. Postal Service, which has been defenestrated by email and digital communications.”

• “This could spell doom for bottom-feeding payday lenders.”

According to the story, “Gillibrand isn't proposing injecting the U.S. Postal Service with steroids and making it a rival for Bank of America or Citibank. Her bill, S. 2755, envisions a modest financial component for a delivery service that's required by law to pay its own way. The Postal Service isn't funded by taxpayers.”

However, the Postal Service isn’t solvent, largely because of how the US Congress requires it to recognize pension and healthcare obligations. The irony is that a move into financial services is being posited as a way for the Postal Service to itself become financially viable.

The Times concedes that Gillibrand’s bill is unlikely to become law, at least in part because it “is a direct assault on industries with plenty of political muscle. Payday lenders certainly won't welcome the prospect of a government-affiliated, low-cost competitor.”

I must admit that I’m a little skeptical about the Eye-Opening notion that the USPS should get into the banking business, but I’m also trying not to be guilty of epistemic closure - which is when you are so hemmed in by your own belief system that you can’t consider other possibilities.
KC's View: