A Postal Savings Bank: Infrastructure that Doesn’t Cost Taxpayers a Dime
Perhaps some would question why I am concerned with such broad issues as the minimum wage and public banking. I would answer that economic growth is important to investors because without it, our investments are speculative; not substantive.
When we invest in the stock of a company we do so because we anticipate the company to be yes, profitable at present but primarily that it will be profitable in the future. Our share of the company means that we have a stake in it; that we will share in its growth and prosperity. Presently, the US economy is experiencing a slow and rather anemic recovery from the most serious recession since the great depression. Trillions of dollars in investment capital and real estate capital were lost during the 2007-2008 recession. This was due to the fact that the largest banks in the country were speculating on securities that were veritably unquantifiable. We learned, post hoc that mortgages were bundled into lots of thousands and then sold in shares, primarily to large financial institutions such as Wall St. banks. To make matters worse, derivatives of these collateralized securities were created such as insurance policies against the insolvency of the mortgage holders underlying the securities, called credit default swaps.
The crisis came when it became apparent that the trading in these securities between the banks had become so enmeshed that the institutions became unsure of their value. A gridlock on Wall St. formed that threatened to bring down the entire economy. The crisis was precipitated by extreme speculation by the banks with depositors money at great risk of insolvency. We now know that the Treasury Dept., led by Hank Paulsen stepped in and, literally with scraps of paper handed to the bankers, solvency and certainty was restored. There is great debate and controversy about this still today.
That brings us to the simple but ingenious proposal contained in this article by Public Banking champion Ellen Brown. Using the existing Postal Service infrastructure, a very low cost and very safe banking service can be created. The article points out that 1 in 4 US households is unbanked. This marginalizes those households in many ways. It causes an unnecessary financial barrier to those households; a drag on economic growth.
At the same time, the US Postal Service which, surprisingly has had a net INCREASE in business due to the boom in online shopping could “…recapitalize itself by diversifying its range of services to meet unmet public needs”. To sweeten the proposal further, the capital formed by the depositors could be loaned to the US Government as “National Infrastructure” bonds, making the Post Office a National Infrastructure Bank, and idea that has wide bipartisan support.
We need every good idea to accelerate this lackluster recovery. This idea would not cost a single taxpayer dollar and save hundreds of thousands of Postal Service jobs. All that would be necessary is a Congressional nod to allow the USPS to expand the scope of its services.