As she watches a man with whom she publicly agrees on almost everything is anointed Prince of Progress, Hillary Clinton feels a burning desire for her liberalism to be recognized. It’s an uphill struggle because she doesn’t seem to understand what it is like to be a working class American. Two words can change everything: Post banking.
Hillary has not lived on the finances. She’s never stood in line to cash a check, waited to pay a fee to convert her earnings, then took a bus to a Verizon store to pay her bill in cash, or bought money orders to send them to turn off so that the heat does not fail, their faucet runs empty. A $ 25 fee never made the difference between Hillary having lunch all week and a stomach turning every day midday until night.
But she can empathize. By advocating for that one proposal – the offer of savings and checking accounts, money transfers, and even small loans through the US Postal Service – Hillary can demonstrate her willingness to face big business for the good of the working class. Much logistically and politically much easier than raising the minimum wage, post banking could be key to securing the nomination and improving the lives of millions of Americans.
Mehrsa Baradaran, a banking lawyer at the University of Georgia School of Law, explains the need to:
Over half the US population would need to borrow if they were $ 400 short of unexpected expenses. Often times, when these people face an emergency, they must borrow from payday lenders at 300-2000 percent APR. And 40 percent of the population either have no or no bank account, which means they rely on alternative financial services like check cashiers. Those who don’t have a bank account pay around 10 percent of their salary to use and move their money. That’s roughly what the average low-income family spends on groceries.
Money transfer companies like Western Union, she says, are also making the poor of our nation poorer by charging historically high international money transfer fees that cannot be justified in the digital age.
Baradaran’s book “How the Other Half Banks” tells the forgotten story of post banking in the US Most Americans take for granted the presence of a small town post office and standardized shipping rates no matter how accessible the point is from origin or destination. That’s because the Postal Act of 1792, which was endorsed by Madison, Hamilton, and Washington, “made several crucial decisions.” Among them was that the institute is financially supported by the federal treasury: self-supporting, but not profit-oriented. Another was that the post office would serve every parish, with the profitable north-south routes being used by merchants who supported the east-west routes.
A century later, the idea of adding banking services began to gain momentum thanks to repeated bank runs and the national panic of 1907. Says Baradaran, “There had to be compromises for the proposal to be accepted. One of them was calling them “poor man’s banks” and capping both interest rates and account balances to reassure bankers they weren’t going to compete. “
In 1910, the United States’ postal savings system was established. It was an instant hit, with $ 32 million in deposits in 1913. As predicted, southerners and westerners who relied on “faltering banks”, the equivalent of cash tucked under the mattress, used the system. Unexpectedly, new immigrants from urban areas also poured in there. Your familiarity with the concept undoubtedly helped. Then as now, post banking was common and trustworthy across Europe.
But we don’t have that today. What happened?
In the 1950s, post banking became unattractive as banks – which had become stable with the introduction of Federal Deposit Insurance – offered higher interest rates on deposits. Federal regulation prevented conglomeration, and credit unions, savings banks, and community banks flourished. In other words, the poor had access to banks that served their needs. “In 1966, as part of the tightening of the federal government by President Johnson, the postal banking system was abolished,” says Baradaran. “The only opposition came from the postal workers’ unions, who were concerned about job losses.”
However, when the banking sector changed from the 1970s onwards due to “both market changes and a strong wave of deregulation”, “a wave of mergers crushed the community banking model and public for-profit financial institutions were forced to merge and give up”. their missions for more lucrative markets in order to survive. ”They left behind unprofitable locations and customers and created“ banking deserts ”.
After both community banks and post banking disappeared, marginal lenders and service providers jumped up to fill the void. Many of us can’t remember a world without check cashiers and payday lenders on the corners of impoverished neighborhoods, but before 1980 it would have been hard to find one.
Unfortunately, most political winks, understanding this story and the injustice it causes, put their weight on the revitalization and support of community banking. Not so Baradaran: “I think we should all loudly lament the loss of the community banks, but in many ways the ghost has left the bottle. The decisive factor was the large and national banking business. The question is how to move forward with a policy of financial inclusion. “
Postbanking offers an elegant solution. Due to the institute’s existing infrastructure, almost everyone would have easy access to a banking location, and online banking could follow. Swiss Post already offers payment orders and processes cash. Postal unions support Restoration of banking services.
Although the fees for accounts, transfers, and loans would remain low because of the Post’s for-profit mission, they would exist. A look at Amazon shows how much sales a low-margin and low-volume model can generate. The resulting profits could save the financially troubled postal service and our democratic ideals all at once.
Hillary only needs to come on board with two policy proposals to get it implemented. First, banking services would be risk-free, but credit will always result in defaults and losses. However, loans could be priced accordingly, and Baradaran says:
Swiss Post can manage these costs for many reasons, including economies of scale and scope, as well as positioning within the federal bureaucracy. Just as the government created, financed, and maintained mortgage and student loan markets and all of the banking / credit apparatus, it can help create a small credit market that even begins the credit playing field.
The second big sale goes to the banks, reflects the pitch in the 1908 elections and goes something like this: “We’re not taking your customers with us. You don’t want these accounts. They weren’t looking for her and neither will they. We won’t touch your business. “
On the other hand, be warned. We come for you.
Bernie has advocates Postbank, but he didn’t make much of it. If Hillary wants to connect with the financially needy and their children, immigrants and their children, this is an issue she should take up and tackle.
She can prove that her realism doesn’t have to preclude big promises. She can boldly stand against corporate interests and show how her knowledge of Washington can lead to real change for those who need it most.
Hillary should use post banking to show the American people what she told them after their loss in New Hampshire: “Even if they don’t support me now, I support them.”
Gail Cornwall is a former public school teacher and lawyer who now works as a homemaker and freelance writer based in San Francisco. Her work has been published online by the Washington Post, Salon, Huffington Post, House Beautiful, and Scary Mommy, among others. You find Gail on Facebook and Twitter, or read more under gailcornwall.com.