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How Obama can save USPS and ding check-cashing joints
January 29, 2014 12:22 PM   Subscribe

...yesterday a new government report detailed an innovation that would preserve one of the largest job creators in the country, save billions of dollars specifically for the poor, and develop the very ladders of opportunity that Obama has championed as of late. What’s more, this could apparently be accomplished without Congressional action, but merely through existing executive prerogatives. What’s the policy? Letting the U.S. Postal Service (USPS) offer basic banking services to customers, like savings accounts, debit cards and even simple loans... a way to deliver needed amenities to the nearly 68 million Americans—over one-quarter of U.S. households—who have limited or no access to financial services. Instead of banks, these mostly low-income individuals use check-cashing stores, pawnshops, payday lenders, and other unscrupulous financial services providers who gouged their customers to the tune of $89 billion in interest and fees in 2012. - The Post Office Should Just Become a Bank
posted by beisny (114 comments total) 41 users marked this as a favorite

 
They do this in several European countries and I don't see why it wouldn't work here, aside from our be-suited overlords not making a killing off gouging us. Apparently we even used to do it here.
posted by Ghostride The Whip at 12:27 PM on January 29 [7 favorites]


First they came for the payday lenders, and I did not speak out, for I am not a bottom feeder.
posted by Flunkie at 12:28 PM on January 29 [40 favorites]


CheckStamp into Cash!
posted by wcfields at 12:29 PM on January 29 [4 favorites]


I feel like the only reason this might be possible is that banks very clearly do not want the types of customers that this would serve. Credit unions might put up a fight though.
posted by Ham Snadwich at 12:30 PM on January 29 [3 favorites]


The Post Office should become a bank that takes your money and doesn't pay interest unless you specifically ask for "forever."
posted by Phssthpok at 12:33 PM on January 29 [2 favorites]


We're on the slippery slope folks because I want to gay marry this idea so hard and it's not even legal in Illinois yet.
posted by MCMikeNamara at 12:33 PM on January 29 [32 favorites]


Yeah I'm really dying for a bank that has the same customer service as the post office
posted by smackwich at 12:33 PM on January 29 [26 favorites]


I feel like the only reason this might be possible is that banks very clearly do not want the types of customers that this would serve.

Don't so be sure that only the poor and the paycheck-to-paycheck would use it. My bank has me in the plush no-fees class so I stay -- despite it being notoriously evil -- because looking at everyone else's fees keeps me from changing. I would seriously consider a socialized alternative.
posted by George_Spiggott at 12:34 PM on January 29 [7 favorites]


I mean on the one hand, sure, I'm on board with whatever gets the moneychangers out of the temple, as it were. Check-cashing and payday loan places are usurious and awful and take advantage of the most financially vulnerable of people.

On the other hand, the post office, at least around here, can't get mail right. I don't know anyone, at least in NYC, who hasn't switched over to UPS or Fedex for shipping anything important. Mail delivery people straight-up lie about attempts to deliver. The post office, with regularity, loses packages that are held for more than two or three days. And I understand why this is happening -- and that it is basically out of the hands of anyone I would interact with in the Post Office -- but it doesn't make it any better and doesn't grant me any more confidence in the USPS

I can't imagine this sort of thing will do anyone any good unless there is a massive influx of capital into the Post Office. Otherwise, it'll just be the same "I don't know where your box is, sorry, go complain to consumer affairs" nonsense except this time with money.
posted by griphus at 12:35 PM on January 29 [3 favorites]


Holding people's money seems not so great to me, but cashing checks should be the first place to start. The trick will be getting undocumented workers to trust it.
posted by Brocktoon at 12:36 PM on January 29 [2 favorites]


The lack of essential banking services to poor areas is a growing problem, but I would be bothered by this solution. Having the USPS serve those areas is essentially subsidizing the disappearance of banks to only high income areas. We'd have a de facto two tier banking system with private banks to take on the wealthy and solid middle class patrons and the government taking the poorer unprofitable customers.

That is not a win for anybody but big banks.
posted by boubelium at 12:38 PM on January 29 [1 favorite]


And your anecdotes about mail delivery are irrelevant. The USPS operates on a massively larger scale than UPS, and provides the same service to rural customers that it does to urban. UPS cannot do that because it is not profitable to do that.
posted by Brocktoon at 12:39 PM on January 29 [49 favorites]


In fact, UPS and FedEx use the USPS to supply last mile service in many places.
posted by NoxAeternum at 12:42 PM on January 29 [43 favorites]


We'd have a de facto two tier banking system with private banks to take on the wealthy and solid middle class patrons and the government taking the poorer unprofitable customers.

Well right now we have a two-tiered system where private banks take on the wealthy and middle class patrons, and then fund predatory lending organizations to make a substantial profit off of poorer customers. Don't see how cutting out the predatory part is a bad first step.

Also I know this is probably regional but I've always gotten great customer service with USPS. When I lived in an apartment the Fedex drivers on our route would routinely lie about delivering packages even after I made multiple complaints. This is an area where anecdotes are dangerous because they portray government services as inherently worse than private ones. I don't think there's any reason that has to be true.
posted by muddgirl at 12:43 PM on January 29 [53 favorites]


And your anecdotes about mail delivery are irrelevant.

Wait, how is the quality of customer service and accountability in the USPS Branch that can't not lose my mail irrelevant to the fact that someone is proposing they also start doing banking in there? This has nothing to do with the efficiency of their delivery network on a national level, but their customer-facing operations on the branch level. I'm sure they'll get the back-end just fine. It's the front-end I have no confidence in.
posted by griphus at 12:43 PM on January 29 [4 favorites]


This is a fascinating idea. In my neighborhood - West Harlem in NYC - there are lines out the door every single day at every single hour, of people getting money orders. They do already use the USPS as a bank - but the service is horrible - it takes hours. Something would have to change to make this work well for low income users.
posted by jardinier at 12:43 PM on January 29 [5 favorites]


When they drop the cover scanning for the NSA, I'm willing to consider the idea. I would be more pleased if they would revoke the portions of Postal Bulletin 21994, issued in 1999, requiring all Commercial Mail Receiving Agencies s to gather ... additional information ... on anyone who wants a box. Blah blah, fight crime, blah blah, hoover up scans of envelopes for the NSA.

I used to have a lot of fondness for the USPS, but it turns out they are just one more relentless tentacle in the machine.
posted by adipocere at 12:43 PM on January 29 [3 favorites]


I lived in England in the 1970s, and post office accounts were quite popular, not just among the lower classes. I did get the impression that the people who used it had small accounts, and that they were no more interested in becoming involved with big banks than the banks were interested in becoming involved with them.

From the other end, I once did some work for a chain of pawn shops, and was shocked to learn the number of people in this country who have no access to banks — really don't even think of them as a possible resource — and wind up paying up to 240% per annum for loans, and lose as much as 10% of their paycheck to check-cashing fees. (This experience was buttressed over the last decade by living in a town where 30% of the population was below the poverty line). I would be strongly in favor of helping these people out, and I think postal banking services would be a great way to do it.
posted by ubiquity at 12:44 PM on January 29 [5 favorites]


semi-previously
posted by the man of twists and turns at 12:45 PM on January 29


I'm really dying for a bank that has the same customer service as the post office

Am I the only living American who has gotten BETTER customer service from the post office than my (former) bank? (Current, much smaller bank is doing better, but not totally so)
posted by oneswellfoop at 12:45 PM on January 29 [38 favorites]


This is an excellent idea that I'm sure will get implemented in America right after we put in single payer healthcare and raise top marginal income and capital gains tax rates.
posted by Aizkolari at 12:46 PM on January 29 [4 favorites]


Something would have to change to make this work well for low income users.

By offering products that make them a bit more profit, like basic checking and savings, they could boost service in low-income areas. The USPS is the only government agency that is supposed to cover more than their own expenses AND provide services that a normal business would declare unprofitable. Their bad service is not inherent - it's a product of the system. Allowing them to expand services should help alleviate problems.
posted by muddgirl at 12:46 PM on January 29 [20 favorites]


Since Visa and AmEx are trying to get into this space, watch this idea get squished faster than you can say "K Street".
posted by JoeZydeco at 12:46 PM on January 29 [3 favorites]


The point of the article is that this action likely would not have to go through congress - Obama and the Postmaster General could argue that this is already part of the post office mandate, since they already provide financial services.
posted by muddgirl at 12:47 PM on January 29 [4 favorites]


This seems like a phenomenal idea to me -- payday loan places are really horrible and parasitic, but they exist for a reason. Part of me would like them outlawed but people who use them aren't stupid, they just need that money NOW and getting it is important for them. Having another way to do that and filling that niche in a way that both puts these awful places out of business and actually helps people in bad situations seems like a really great idea to me.

In terms of service, yes, there are problems with the post office, but at the very least they have the needs of their customers in mind and actually work to serve people. There are issues as there are with any bureaucracy; they handle a ton of mail and sometimes your number just comes up and yours is what gets lost. On the other hand, they deliver a TON of mail, really a ton, and to EVERYONE, and for pretty cheap. Please, please let's not underestimate the postal service and what they provide, especially for many poorer and rural families.
posted by Mrs. Pterodactyl at 12:48 PM on January 29 [25 favorites]


I get the personal grievances with USPS and personal mail service, but the other side isn't being discussed here: an end to payday loans and check. Cashing businesses. I doubt there is much that would lure small banks back to poor and blighted neighborhoods where payday loan companies feast, so saying that this is a win foe Big Banks and whatnot is overlooking the fact that people are losing right now, and this is a viable solution.
posted by filthy light thief at 12:49 PM on January 29 [9 favorites]


My bank, a large, regional monster bank, has really terrible customer service. My post office, which I use to ship packages very frequently, has great customer service.
posted by vibrotronica at 12:49 PM on January 29 [3 favorites]


Also I know this is probably regional but I've always gotten great customer service with USPS.

That's exactly the issue. There's so much regional difference in how the USPS works -- apparently totally awesome in some places, practically broken here in New York City -- that the problems it solves with the right hand, it creates with the left, all with the added bonus of additional work and responsibility all around.
posted by griphus at 12:49 PM on January 29 [1 favorite]


Also, yeah, I've gotten both great and terrible customer service at the post office. This doesn't really need to turn into anecdote wars.

To me, the bottom line is that this has the potential to help people who really need help without much collateral damage. The fact that it would put asshole fucking check-cashing places and some other truly terrible aspects of our society out of business is just a gleeful bonus.
posted by Mrs. Pterodactyl at 12:52 PM on January 29 [1 favorite]


The postal system is hurting because their typical mail service is declining, while banks pull out of poor neighborhoods. This could bolster the postal service, allowing them to stop cutting back and possibly expand. I doubt they would try to do everything with just the existing stafff.
posted by filthy light thief at 12:53 PM on January 29 [1 favorite]


...without much collateral damage

See, that's the part I disagree with but apparently I am one of those people who can unironically say "don't even get me STARTED on the goddamn POST OFFICE" so I am going to go cool off somewhere.
posted by griphus at 12:53 PM on January 29


Moist Von Lipwig approves.
posted by The otter lady at 12:57 PM on January 29 [25 favorites]


I'm actually primarily excited about this idea for rural areas. I know of so many small towns in my area (rural South Dakota) that either lack banking facilities entirely, or rely on a small, not-always-open farmers unions (there mostly for insurance and ag loan purposes) or neglected satellite branches of some chain in the grocery store. This is less helpful with the closure of a lot of rural post offices, but I know a number of people (younger folks and poorer adults) who would be more inclined to drive to the local Post Office than to a bank an hour away and pay dearly for the privilege.
posted by neonrev at 12:57 PM on January 29 [2 favorites]


Fifty nine percent of post offices are in zip codes with no banks. I mean, the "leverage existing infrastructure" aspect of this is monumental. There are tons of problems with the US Postal Service, but between the worst Post Office in the United States and a payday lender / cash checking store, you'd have to give the edge to the Post Office.
posted by graymouser at 12:59 PM on January 29 [59 favorites]


Their bad service is not inherent - it's a product of the system. Allowing them to expand services should help alleviate problems.

I partially agree. There's not only regional differences, but differences within the city. The neighborhood post office here in West Harlem is abysmal, but sometimes I go to one on the Upper West side and it's glorious. The staff, the facilities, everything about those two offices is completely different. I don't think it's a funding issue based on services, etc. I think it's the same thing that differentiates all infrastructure - class and race, money, and power. There would have to be something like European postal service here before it would work as a bank - where every branch is the same and staffed the same.
posted by jardinier at 1:00 PM on January 29 [2 favorites]


I get great customer service at the bank and also at the post office because I smile.
posted by oceanjesse at 1:00 PM on January 29 [6 favorites]


I have trouble seeing this working.

Bank and non-bank consumer finance are each already intensely competitive. Between them they are in every market, serving every customer, where they can do slightly better than break even already.

While the Post Office could forgo profit margin, its personnel, real estate and overhead cost structures are massively higher than storefront alternatives' and commercial banks' consumer divisions' costs.

Offering people with bad/no credit short term loans at lower-than-market (i.e. existing payday loan / non-bank personal rates) would create another huge burden on margin. Even if it is only cashing checks, and doing no lending, that's a very substantial amount of credit underwriting and collections infrastructure which the Post Office has none of now and would have to build at extraordinary expense. A full suite of credit products would multiply that.
posted by MattD at 1:01 PM on January 29


I've been swapping books across the country for the past 4+ years. In that time I have probably mailed or received about 500 packages, mostly using USPS Media Mail. I have been continually impressed with how quickly and correctly the packages are handled. I live in an exurb north of Minneapolis. I often use a branch in downtown Minneapolis and the service there is always efficient and usually friendly. However, read the forums on the book swap sites and you will hear about people having to drive 20 miles to the nearest PO and delivery horror stories. It does seem very regional.
posted by soelo at 1:06 PM on January 29 [1 favorite]


While the Post Office could forgo profit margin, its personnel, real estate and overhead cost structures are massively higher than storefront alternatives' and commercial banks' consumer divisions' costs.

If you RTFA, it's very clear that the Post Office would be using existing Post Offices (and possibly existing staff for customer service), though presumably this would entail an expansion of staff) to provide services and not be building storefronts.

Read the white paper if you intend on offering any substantial criticism of the idea. It's talking about partnering with banks and leveraging existing assets to accomplish all of this, not simply "becoming a bank" as the misleading title implies.
posted by graymouser at 1:07 PM on January 29 [8 favorites]


Bank and non-bank consumer finance are each already intensely competitive. Between them they are in every market, serving every customer, where they can do slightly better than break even already.

Is this true? That would imply that the pawn shops and payday lenders are actually charging the lowest amount of interest possible to offset all the defaults and other costs of lending in that market. I've been wondering why, if the payday lenders are ripping off poor people so badly, nobody comes in and eats their lunch by offering a better deal. Is there some sort of price fixing going on to keep the interest rates high?

Would the Post Office actually be able to afford charging significantly better rates for the same market?
posted by straight at 1:12 PM on January 29


Am I the only living American who has gotten BETTER customer service from the post office than my (former) bank? (Current, much smaller bank is doing better, but not totally so)

The customer service I get from my local post offices is perfectly fine.
The problem is that they are horribly understaffed.
15-20 minute waits to get to the 2 open windows (in a row of 6 or 7) are not uncommon.

Contrast that to the local branch of my Giant Monster Megabank, where the longest I've had to wait it about 2 minutes.

I'm not saying USPS banking is a bad idea, I think it makes a lot of sense, but hopefully they will use some of the cash infusion for staffing changes rather than just making people calculate a time/money trade-off.
posted by madajb at 1:14 PM on January 29 [2 favorites]


The real estate maintenance and running costs of a typical post office exceed the all-in occupancy costs of a typical check-cashing or payday loan joint, and not by a little. Many of these costs are variable, not fixed, and would increase dramatically with a new line of business.

Postal staff are fully tasked for postal jobs now -- banking services would be a new cost line even if it were through the reassignment of employees from declining mail services, and would not be able to be cross-subsidized through postage that wouldn't be sold. The total personnel costs for a payday lender's in-store personnel are in the $10/hr to $15/hr range. I don't have the Postal total personnel costs per hour but I'd guess they are twice or more that.
posted by MattD at 1:15 PM on January 29


A post-office bank would not need to compete with payday lenders for people who need money now. What it would do is provide a way for people with bank accounts to get paid with significantly lower fees, either through direct deposit of pay or depositing pay cheques into their accounts which after a few days of clearing would then be available to them.

Right now there is nothing for people without bank accounts to do besides go to these cheque cashing places and they pay outrageous transaction costs as a result.
posted by any portmanteau in a storm at 1:16 PM on January 29 [1 favorite]


My brother, for several years, did all of his banking via a machine in 7-11. I'm fairly certain that this proposal would have been a step up for him in service and would have reduced his costs.

The 7-11 machine was open 24 hours, though, which was kind of nice.
posted by jsturgill at 1:18 PM on January 29 [1 favorite]


I've been wondering why, if the payday lenders are ripping off poor people so badly, nobody comes in and eats their lunch by offering a better deal. Is there some sort of price fixing going on to keep the interest rates high?

The interest rates are obscene because the default rate is very high. The interest paid on payday loans is mostly backing the ones that go bust, and providing a profit on top of that.

Would the Post Office actually be able to afford charging significantly better rates for the same market?

In the projected model, the USPS would be much more able to collect on defaults (i.e. from tax refunds) and a few other methods. If you're really interested, read the white paper linked in the article, it goes into some depth on how the postal loan model could work versus payday loans.
posted by graymouser at 1:19 PM on January 29 [7 favorites]


I can't imagine this sort of thing will do anyone any good unless there is a massive influx of capital into the Post Office.

Fortunately, this proposal would probably provide a massive influx of revenue for the Post Office.

Unfortunately, this proposal would probably require the involvement of congress, which would mean that the same forces there that have made law making it difficult to balance USPS books would also have an opportunity to divert this revenue somewhere other than an account in the black or capital improvements.
posted by weston at 1:19 PM on January 29


If there's two things as certain as death and taxes, it's user gripes about the USPS and IKEA. Yet, I've never had a problem at all with either.

With IKEA, you get to see all of the furniture on the floor, evaluate its quality, and then bring it home and set it up yourself. I'm truly convinced that people with "crappy IKEA furniture" are just bad at assembly, evaluating their usage, or choose to make a modification that contributes to instability. Basically, user error.

USPS seems like much of the same. I've seen so many people who don't know how to properly address an envelope. They take three times as long as necessary at the self-service machines. They don't know what forms they need when they go to the counter. All user error.

Unless it's the LA Post Office. Fuck that place.
posted by explosion at 1:20 PM on January 29 [6 favorites]


USPS seems like much of the same. I've seen so many people who don't know how to properly address an envelope. They take three times as long as necessary at the self-service machines. They don't know what forms they need when they go to the counter. All user error.

My building is number 80 [Foo] Avenue. My building is very clearly marked with a big "80" on the door.

Twice a month, I see packages in my building for 82 [Foo] Avenue, or 86 [Foo] Avenue, or 96 [Foo] Avenue. Sometimes I even get mail in my mail slot for Apartment [schmeh], 82 [Foo] Avenue. The proper address is clearly and distinctly marked on the package or envelope, and yet it ends up in my building.

I also get packages for 80 [Flo] Avenue. That, too, is clearly marked with the proper address of [Flo] Avenue as opposed to [Foo] Avenue - on typewritten labeling with big font, even - but they end up at [Foo] Avenue nevertheless.

We also sometimes get packages for 80 [Foo] Street, which - while it does indeed exist - is an entirely different zip code.

It may be "user error," but the package recipients ain't the users who are screwing up.
posted by EmpressCallipygos at 1:25 PM on January 29


Unfortunately, this proposal would probably require the involvement of congress

In TFA it specifically mentions in the first sentence that this is a method of creating jobs by bypassing Congress. The measures outlined are ones that are already within the USPS's existing authority and wouldn't require new legislation.
posted by graymouser at 1:25 PM on January 29 [4 favorites]


Unfortunately, this proposal would probably require the involvement of congress

Actually no, the white paper suggests it can be a natural extension of the money orders they already do. They could theoretically start doing it next week. Congress could always try to pass a law forbidding them from doing it, but gridlock works both ways and it likely wouldn't get through. Meanwhile, the post office can keep expanding its financial services without needing to check with Congress.
posted by echo target at 1:27 PM on January 29 [2 favorites]


I dunno if these guys are reputable/shills/whatever, but here are their numbers:

Average fee revenue equaled $15.26 per $100 payday advance loan.

Average cost equaled $13.89 per $100 payday advance.

The cost per $100 loan includes a bad debt cost of $3.74 and operating costs of $9.41.

The remainder of the costs reflects the cost of loan capital and supplementary capital.

On a pre-tax basis, the average profit equaled $1.37 per $100 loan issued.

On an average payday advance of $379, providers realize an average pretax profit of $5.22.

The payday advance product is a core service line among the surveyed locations and it generated approximately 51 percent of their total revenue.

posted by jsturgill at 1:27 PM on January 29 [2 favorites]


Is there anything more tedious than complaints about the USPS?
posted by entropicamericana at 1:28 PM on January 29 [6 favorites]


Seriously, go read the white paper before you explain how this couldn't possibly work. It's really pretty convincing.
posted by echo target at 1:28 PM on January 29 [3 favorites]


The only problem with this that I experienced while living in the UK is that you pretty much don't want to go to the post office around the first of the month because the lineups are bad.
posted by srboisvert at 1:29 PM on January 29 [2 favorites]


Is there anything more tedious than complaints about the USPS?

Complaints about customer service and wait times at the DMV? Complaints about people receiving food stamps purchasing potato chips and birthday cakes? Complaints about road construction interfering with one's commute?
posted by jsturgill at 1:31 PM on January 29 [17 favorites]


The interest rates are obscene because the default rate is very high.

The proposal here gets around that in an interesting way. Apparently the Treasury has an offset program where if you owe money to a different government branch, they can take it out of your tax return. Most people using 'alternative financial services' have a low income and get a decent-size return on their taxes, so there'd be something there to pay off the loan.

That's the kind of thing that would be creepy and predatory if a private company were doing it, but with proper oversight seems like it could be just fine for the USPS.
posted by echo target at 1:34 PM on January 29


I'll say this much:

When I was out of work, the post office didn't decide that I needed to pay more to send or receive mail, nor did they suddenly find the need to charge me for the very privilege of having a mailbox.

I cannot say the same for Bank of America.

Seriously. Fuck those guys.
posted by schmod at 1:37 PM on January 29 [38 favorites]


Some comments on reading the USPS proposal:

- They propose a $25 flat fee + a 25% interest rate. On the hypothetical $375 loan, that's a 40% APR. Lower than many check cashing places, but still sort of gouge-y.

- They propose using the IRS to serve as the debt collector, offsetting refunds. The IRS, of course, can garnish wages and seize property, so that could be politically iffy and pretty sketchy to use the IRS as the muscle to recoup the 40% APR loans.

- They propose partnering with banks to have them keep the loans on their books; does that mean selling the loans off to the banks? Sounds like it. So that means the IRS would basically be seizing paychecks from people and taking refunds to give the proceeds to banks. I have a hard time seeing that become policy. Both the left and right would have a field day with that.
posted by jpe at 1:38 PM on January 29 [4 favorites]


Is there anything more tedious than complaints about the USPS?

Yeah, not getting your goddamn mail. I have a small business, and I have had the same address for 11 years. We got a new postal carrier about 3 yrs ago and ever since a not insignificant amount of my mail, the majority of which are payments to my business, are misdelivered or returned to sender, even though when i finally do get them, they are clearly addressed correctly.
I have complained to the local post office every few months and even, just this week, to the regional customer service office. it sucks. fuck the USPS. they can die tomorrow.
posted by OHenryPacey at 1:38 PM on January 29 [2 favorites]


How Obama can save USPS and ding check-cashing joints


Alternative title: Yet another reform Obama can't be fucked to try because he's a neoliberal Clintonite in sheep's clothing.


You know what the difference between a neoliberal and a neoconservative is? Smaller wars.
posted by clarknova at 1:40 PM on January 29 [3 favorites]


the white paper suggests it can be a natural extension of the money orders they already do.

I don't think it does suggest that. Here's the extent of what it says on that point:

As a first step, the Postal Service could explore services similar to those it is already authorized to provide, such as money orders and international money transfers.

Seems like a stretch to get to payday lending from that.
posted by jpe at 1:42 PM on January 29


I have a small business, and I have had the same address for 11 years. We got a new postal carrier about 3 yrs ago and ever since a not insignificant amount of my mail, the majority of which are payments to my business, are misdelivered or returned to sender, even though when i finally do get them, they are clearly addressed correctly.

Oh, you've just reminded me - apparently late last year, the Brooklyn Academy of Music had a problem whereby their local post office just.....didn't deliver them their mail for 3 weeks. When pressed, they didn't give any good explanation for what the holdup was. For all BAM knew, the post office just threw all their mail into a bag and left it there just....because.
posted by EmpressCallipygos at 1:46 PM on January 29


Fifty nine percent of post offices are in zip codes with no banks.

I'm pretty sure this is a misleading statistic. I have a post office box in a ZIP code that contains no banks. That's because that ZIP code contains only the post office.
posted by one more dead town's last parade at 1:49 PM on January 29


Seems like a stretch to get to payday lending from that.

Right, so they'd start by offering a prepaid card. You allow people to use direct deposit to put their paychecks on the prepaid card. You make the card usable at ATMs. At this point it's a bare-bones checking account.

The 2006 law prevents the post office from offering new services, but they already offer financial services (money orders). The prepaid card is similar enough that it's not really a 'new' service. You're right that there's a question of interpretation, and somewhere between prepaid cards and payday loans there might need to be some explicit Congressional approval, but the early steps seem pretty clearly possible without it.
posted by echo target at 1:51 PM on January 29 [1 favorite]


fuck the USPS.

Yeah, man. I'm sure that your customers will be much happier with cheapest FedEx/UPS ($17.77/$25.63 best I can tell) letter deal than the 49 cents the USPS charges. I'm not saying that their service is perfect but your anecdote is nothing like the whole story. Problems in your Post Office (or many of the NYC Post Offices, apparently (although I never had problems when I lived there)) are troubling, but are likely the product of the Post Office being required to act like the private sector when it is NOT the private sector. That is a solvable problem. This is one possible partial solution, which has a lot of other benefits.
posted by dirtdirt at 1:51 PM on January 29 [8 favorites]


A postal loan for the same amount could cost just $48, leaving already cash-strapped borrowers with more money in their pockets to pay other bills and lift themselves up by their own bootstraps.

Ahahahha brilliant little preemptive "fuck you republicans who would sink this".
posted by Talez at 1:56 PM on January 29 [7 favorites]


Let's say the 59% number is twice as high as it should be. OK, we're down to 30% of zipcodes without banks, and that is still significant. Then there's the requirements to open an account that most banks have, because they are a business and need to make a profit. And even if USPS didn't start loaning money, opening saving accounts and offering debit cards are relatively safe, and still provides a service lacking from some communities.

Ignore the fact that USPS is involved. Just look at the option for Obama to start something epic with the existing structures in place. Wil this really happen soon? I'm not betting on it. But the fact that it could happen is pretty exciting.
posted by filthy light thief at 2:11 PM on January 29 [2 favorites]


The point of the article is that this action likely would not have to go through congress...

That's good, because Congress is seemingly hell-bent on strangling the USPS until it has no other choice but to sell itself off and shut down. Between the pension funding mandate and the refusal to allow anything close to a reasonable postage rate (i.e. one that actually covers the cost of moving the mail) it's amazing it continues to operate. Pretty much every complaint one might have about service at the USPS comes down to lack of manpower and/or adequate funding.
posted by Thorzdad at 2:12 PM on January 29 [3 favorites]


Is there anything more tedious than complaints about the USPS?

Waiting in line at a USPS post office.
posted by Blazecock Pileon at 2:12 PM on January 29 [1 favorite]


I'm pretty sure this is a misleading statistic. I have a post office box in a ZIP code that contains no banks. That's because that ZIP code contains only the post office.

You did read the report, right? Because right below the cheerful graphic on page 6 showing the proportions of post offices in "banking deserts" is the clear text: Note: Excludes Post Offices with unique ZIP Codes.
posted by Homeboy Trouble at 2:14 PM on January 29 [11 favorites]


I'm pretty sure this is a misleading statistic. I have a post office box in a ZIP code that contains no banks. That's because that ZIP code contains only the post office.

Any statistic that tries to use ZIP codes as shorthand for area is inherently misleading. ZIP codes are lists of addresses which can be turned into postal routes. Turning them into polygons that define areas can only distort whatever data you're trying to map onto them.
posted by Copronymus at 2:14 PM on January 29


We're on the slippery slope folks because I want to gay marry this idea so hard and it's not even legal in Illinois yet.

How do you know what gender the idea is, Mike? Maybe you just want to straight-marry it.

I had a friend many years ago who worked in retail with me, and didn't want to pay a bank to hold his money. But even if you're willing to take the risk of storing your cash at home, it turns out you pay even more to transform your money from a check to cash when you don't have a bank. It was stupid then, it's stupid now. I'm all for this.
posted by emjaybee at 2:16 PM on January 29 [1 favorite]


Any statistic that tries to use ZIP codes as shorthand for area is inherently misleading. ZIP codes are lists of addresses which can be turned into postal routes. Turning them into polygons that define areas can only distort whatever data you're trying to map onto them.

Fine... use ZCTAs then, and incorporate the block code as some some sort of milk run vis a vis Canadian postal codes.
posted by Nanukthedog at 2:16 PM on January 29


We're on the slippery slope folks because I want to gay marry this idea so hard and it's not even legal in Illinois yet.

How do you know what gender the idea is, Mike? Maybe you just want to straight-marry it.


Mail. Duh.
posted by hal9k at 2:17 PM on January 29 [23 favorites]


practically broken here in New York City

idk man i have never had a single serious problem with the USPS in my entire life here, aside from the fact that the post office is too hot sometimes in the winter. literally the worst thing that has ever happened to me was the time my mailman left a package containing tasty chocolates on top of the radiator in december.
posted by elizardbits at 2:22 PM on January 29 [1 favorite]


Watch them use Chexsystems, and still ban probably 80% of the people who desperately need this anyways.

That is of course assuming this ever happens, which is HAHAHAHHAA
posted by emptythought at 2:34 PM on January 29


jpe: - They propose a $25 flat fee + a 25% interest rate. On the hypothetical $375 loan, that's a 40% APR. Lower than many check cashing places, but still sort of gouge-y.

Something i've always sort of wondered, what is considered a "fair" interest rate? You have to realize these are yearly interest rates that can go up to 1000% at normal check cashing places.

First of all, they would barely get to collect any of that interest if someone payed it back in a couple weeks like they're supposed to.

Secondly, they're taking on a lot of risk of default and losing money selling these off to collections(or becoming licensed to report to credit agencies and do that kind of thing internally, self insurance style like some banks do IIRC) or just failing to collect on them.

I don't understand how people expect these kinds of loans to work. Are the predatory interest rates the check cashing places charge fucked? Yea. Is this an inherently high interest type of loan unless it's being operated by a non-profit? Yea, it really seems like it to me.

Like, how do you expect to keep your doors open when a huge percentage of your customers either pay way late or never unless you're using interest from other customers to subsidize that? I've always wondered what the logical endpoint of this sort of discussion was, once you throw that barrier in the way.


That said, on the customer service front i've actually had fairly decent experiences with them. One time a box showed up completely fucking smashed having destroyed a fairly valuable piece of electronics inside. The ebay seller went silent, and ebay told me to contact USPS since it was shipped insured. They refused to honor their insurance because they couldn't contact the shipper, and wouldn't move forward at all without his receipt/paperwork.

But they had already taken the package back, including my photos of it unopened(which were digital, so i still had copies).

I ended up giving them a couple weeks, then just demanding my box back. They actually got it back and gave it to me. When i've been boned over by other shipping companies that stuff just black holes. I ended up being able to sell it damaged and recover almost all my money because that specific item was becoming increasingly rare, and the parts were worth $$$. Although it was a crap situation, i didn't end up too unhappy. And it really did seem like it was the ghosting asshole mailers fault for not following up with them(although, why did they need anything from him?)

Other than that, i'm super happy with the USPS. Only place that has money orders up to 1k for under $2. I did the math and realized i was a goddamn idiot for paying $27 for a box of checks when it would take me around 2 years for that to equal out with how often i actually use checks. I can only hope if they really did start offering banking services their fees would be that cheap.

But for fucks sake, the entire idea is hosed if they partner with regular banks. Regular banks are what's wrong with banking. Doing that would be like "Lets cure cancer by giving you AIDS!"
posted by emptythought at 2:55 PM on January 29


That's why banks charge such high rates.

And that's why the USPS is on crack if they think the banks will make unsecured loans at lower rates based entirely on the USPS credit assessment.
posted by jpe at 3:08 PM on January 29


Doing that would be like "Lets cure cancer by giving you AIDS!"

actually using HIV as a vehicle for killing cancer cells has been, and I believe still is, a subject of promising research. I mean I get your point but
posted by feckless fecal fear mongering at 3:12 PM on January 29 [2 favorites]


Mail. Duh.

"It's a Tubman 601, I flew one in Little Neddy Goes to War!"
posted by TwoWordReview at 3:28 PM on January 29 [2 favorites]


Because I'd rather do my banking at the only place with longer lines and worse customer service than my bank?
posted by w0mbat at 3:34 PM on January 29


I don't think this is aimed at people who can say things like "I'd rather do my banking at..."

It's aimed at people who can say things like "I can't get a bank account anywhere else."
posted by feckless fecal fear mongering at 3:36 PM on January 29 [12 favorites]


Japan Post Bank, essentially the Japanese version of what is being proposed, is the world's largest deposit holder.
posted by gen at 4:18 PM on January 29 [3 favorites]


You did read the report, right?

No report was linked as a citation for the 59% figure either in the article in the post or in graymouser's comment above. Now it's my job to hunt down statistics that people are citing?
posted by one more dead town's last parade at 4:47 PM on January 29


The Collections staff can just hold your mail, possibly even including electronic benefits payments, if you are late on their loan to you. That might help limit delinquencies.
posted by wenestvedt at 5:27 PM on January 29


Just chiming in: I've lived in six different metropolitan areas — rich places, poor places, big places, middle-sized places, on both coasts and in the middle. The USPS was absolutely stellar everywhere except for NYC, where it was a complete trainwreck.

FedEx and UPS (both kinda bad everwhere, in my experience) were no better than the USPS in NYC. They seem to actively enjoy leaving packages places where they'll vanish within five minutes...
posted by You Can't Tip a Buick at 5:30 PM on January 29 [1 favorite]


If it worked for Animal Crossing it can work for you.

And maybe a lot of you would have less customer service issues if you went when Polly was working instead of Phyllis.
posted by NoraReed at 5:52 PM on January 29 [1 favorite]


> No report was linked as a citation for the 59% figure either in the article in the post or in graymouser's comment above. Now it's my job to hunt down statistics that people are citing?

It's from page 6 of white paper "Providing Non-Bank Financial services to the Underserserved" from the USPS Office of inspector General that graymouser linked to (page 11 of the pdf): "59 percent of Post Offices are in ZIP Codes with one or no bank branches." It breaks down to 38% of US post offices in zip codes with no bank branches and 21% in zips with just one. The rest have two or more.

I'd really recommend reading this if you want to get an idea of what the USPS is thinking about doing. It's only 28 pages, but you want to skip the intro and preamble and go straight to a description of the services they're considering, you can start at page 9 (page 14 of the pdf).
posted by nangar at 5:57 PM on January 29


literally the worst thing that has ever happened to me was the time my mailman left a package containing tasty chocolates on top of the radiator in december.

That is by far the worst USPS story I've read.
posted by jeather at 5:58 PM on January 29


Excellent idea. Japan Post also has banking, and it's not for poor people--it's just one of many banks.
posted by zardoz at 6:53 PM on January 29


I think this would be a great service to the country, but I don't see how it's profitable. The big banks can cherry-pick the profitable customers -- rich people with big balances and poor people who pay lots of fees. Providing bank services to responsible poor people is a good thing of course, but there is no reason to think the USPS would be able to turn a profit at it when private enterprise has failed to do so repeatedly.
posted by miyabo at 7:04 PM on January 29


Wasn't the Japan Post banking system the root of Japan's economic stagnation? I thought the take on it was that it encouraged savings at the expense of optimal capital distribution.

Economists on MeFi, any help here?

LOL of course not
posted by graphnerd at 7:17 PM on January 29


Now it's my job to hunt down statistics that people are citing?

If you're going to refute a scholarly argument, then yes. It is.
posted by clarknova at 7:18 PM on January 29


Warning: Ignorant Aussie ahead.

Australia has had banking in post offices since I was a kid. At first they aligned with the national, public owned, Commonwealth Bank and they continued with that bank when it was privatised.

I don't understand American banking at all. For example, cheques are rarely used in Aus now and even when they were, you would never have the cheque posted back to you (what an added expense!), you'd just check it off against your statement. Most bill payments are done electronically; purchases are made via cash or eftpos; wages are paid directly into the bank, or paid in cash (legislated). I also don't understand what stops people from having bank accounts. Is it fees? Is it the fact that the banks are not national and thus branches are not available? Why do people need physical banks at all? I guess my basic question is, why is the US so behind the times when it comes to electronic banking?
posted by Kerasia at 7:28 PM on January 29 [1 favorite]


I also don't understand what stops people from having bank accounts.

Fees. Accounts often costs $10-$20 a month unless you have a large minimum balance or use other bank services (like mortgages or paycheck direct deposit).

why is the US so behind the times when it comes to electronic banking?

There are about 12 different ways to send money electronically. All of them suck. The cheaper ones take as long as a week to process, and the expensive ones are really really expensive.

For what it's worth a "paper" check is now processed entirely electronically once it hits the bank -- your bank scans the check and then shreds the physical piece of paper. So the pieces are there to switch to a fully electronic checking system, but the government simply hasn't passed the necessary legislation to make it happen.
posted by miyabo at 7:37 PM on January 29


You mean you PAY for electronic funds transfers? That is just a ridiculous rort. And are there no national banks that provide fee-free banking for low income earners? Wow.

It sounds as though Obama is trying to level the field a little for those at the mercy of vampirous banks.
posted by Kerasia at 7:44 PM on January 29


If you're going to refute a scholarly argument, then yes. It is.

And when a scholarly argument comes up, then I will!
posted by one more dead town's last parade at 7:46 PM on January 29


I guess my basic question is, why is the US so behind the times when it comes to electronic banking?

Basically, while of course you won't hear it discussed seriously in US media as opposed to dumbass "our kids did bad on PISA" and "China's GDP eclipsing US GDP" nonsense, the US is losing it, slipping, falling behind. Every time I so much as visit Canada, the divergence has grown. This time, it was: riding train in America, spotty cell phone service, no data. Train stops at the border, I get a text, "Welcome to Canada! Enjoy your complementary web access!" and that works at good speed for the rest of the trip. It was receiving modern plastic cash from the ATM. It was how slowly everything's become NFC and by this trip I'm just waving cards around at everything (idea: NFC tattoos for Montreal strippers?) conveniently while I can just barely occasionally use NFC in the US. It was now-legalized prostitution (my friend was bringing up the idea that due to the superior citizenry that might be a good idea for Canada but bad idea for USA.)

USPS should be competing with Amazon as a public option baseline logistics-for-web-commerce deal, at least the physical package bits, but there's no fucking vision. I would love to be going to USPS locker to pick up my free 2-day shipping from any established merchant in the country, but IRL private enterprise has to pick up the slack and I go to the Amazon locker. I was struck by these demands in this SF anti-tech letter: "Tech companies pay for their impact on housing and public infrastructure. They should fund: affordable housing initiatives, eviction defense, public transit service improvements..." Even the fringe leftists' hope is for private enterprise to patch over governmental failure rather than for the SF/Cali gov'ts to get their thumbs out of their asses and allow/build apartments and trains.
posted by save alive nothing that breatheth at 8:30 PM on January 29 [7 favorites]


And they could pay interest with stamps.
Stamps with pictures of food on them.
Food stamps.
posted by blue_beetle at 8:33 PM on January 29


The Collections staff can just hold your mail, possibly even including electronic benefits payments, if you are late on their loan to you. That might help limit delinquencies.

Just to clarify for anyone who's wondering, this has never been seriously suggested by anyone at any time, ever. It is not part of the Inspector General's plan.
posted by echo target at 8:34 PM on January 29 [1 favorite]


I thought the take on it was that it encouraged savings at the expense of optimal capital distribution.

And I thought it was the asset price bubble that caused it. The banks did play a role in creating the Lost Decade, because they would provide low interest loans to failing firms. But this wasn't a problem caused by the existence of post office banking, though. And (it has been a while so I may be wrong about this part) these easy loans were given because post-war coordination between banking, industry, and government was common.
posted by FJT at 8:46 PM on January 29


Apart from the prohibitive fees, according to an NYT article that MoonOrb linked to a few months back the databases and mechanisms used for blacklisting people to prevent them from getting bank accounts are also a big obstacle for many. (The aforementioned ChexSystems is one provider of that kind of blacklisting service.)
posted by XMLicious at 9:56 PM on January 29 [2 favorites]


I guess my basic question is, why is the US so behind the times when it comes to electronic banking?

Because the free market (and it took an effort to skip the tired scare quotes there) is uninterested in implementing anything that involves competitors interoperating. They're quite fond of "innovating" (oh yes, there they are) walled-garden and proprietary features, but as far as they're concerned actually building anything that benefits the customer across all competitors is just throwing money away.

This is also why we didn't get standardized carrier-agnostic SMS text messaging for the better part of a decade after the rest of the world.
posted by George_Spiggott at 10:01 PM on January 29


In Bosnia-Hecegovina the post-office handles telephone and Internet service as well as letters, packages and stamps. Service was decent. Their Internet service was dirt cheap at the time I lived there.
They don't handle anything financial.

As noted by a couple others, the British had banking services, and I think it was better for low-income people.
Currently there is a market some of you may be un-aware of for postal+banking services in the US.
EBT for cash benefits for people who receive welfare or Social Security benefits.
Right now those services are contracted out to assorted huge banks.
Why NOT distribute these benefits through the Post Office?

I don't go to payday lenders or the usual check cashing places. Not even for money orders.
I do my money orders at Walmart. It's cheaper than the post office. I have used the post office if I was in a hurry, in town, on foot and mailing the money order immediately.
posted by Katjusa Roquette at 10:06 PM on January 29 [1 favorite]


What a lovely idea. Evidently, several other contries have some banking features with their postal system. China did, but in 2007 they spun the banking business into a separate Postal Savings Bank of China.
posted by qxntpqbbbqxl at 10:32 PM on January 29


I like the idea very much. Do it, America.
posted by pracowity at 3:50 AM on January 30


The USPS should charge more for a stamp for a letter to Sochi, Russia than for one delivered to my neighbor across the street before they plunge headlong into financial manipulation.
posted by chuckiebtoo at 5:15 AM on January 30


Even the fringe leftists' hope is for private enterprise to patch over governmental failure

The neocons have won.
posted by feckless fecal fear mongering at 5:32 AM on January 30



The USPS should charge more for a stamp for a letter to Sochi, Russia than for one delivered to my neighbor across the street before they plunge headlong into financial manipulation.


They already do that. International postage is more expensive.
posted by GrapeApiary at 6:18 AM on January 30 [4 favorites]


This seems especially important, given that employers are trying to force people without bank accounts to receive their paychecks on prepaid debit cards with lots of fees for typical transactions. From the linked article:
On some of its payroll cards, NetSpend charges $2.25 for out-of-network A.T.M. withdrawals, 50 cents for balance inquiries via a representative, 50 cents for a purchase using the card, $5 for statement reprints, $10 to close an account, $25 for a balance-protection program and $7.50 after 60 days of inactivity.
And this item from the whitepaper:
Being underserved often comes at a hefty price. The average underserved household has an annual income of about $25,500 and spends about $2,412 of that just on alternative financial services fees and interest.4 That amounts to 9.5 percent of their income. To put that into perspective, that is about the same portion of income that the average American household spends on food in one year.5 In 2012 alone, the underserved paid some $89 billion in fees and interest.
posted by Ham Snadwich at 7:34 AM on January 30 [2 favorites]


The USPS can't be the only one with powers in their remit that can be used creatively like this for socially valuable revenue-generating programs with an end-run around Congress. Surely the puzzle pieces are out there to be put together. The White House should be actively seeking out ideas like this and financially rewarding the people who come up with ones good enough for further study, with further rewards for any that make it into pilot programs.
posted by jason_steakums at 8:48 AM on January 30


Not sure what electronic payment takes a week to clear. Even ACH (the electronic part of the check clearing system that until the Check 21 Act required that the actual paper checks eventually be shipped around as well) takes a day or two at most.

Plenty of banks will sit on those transfers as long as the law allows, which is much less time than it used to be, but still can be a couple of days in some instances. Mine doesn't. I get an ACH deposit, it's available immediately. I initiate an ACH withdrawal, it's gone from my available balance in 5 seconds and cleared and posted that night.

Doesn't help if you can't get a bank account, though, which a lot of people can't. Our system is not well designed for instant clearance (ACH transactions can be reversed for insufficient funds after the fact), so there is some credit risk with any demand deposit account, unfortunately, and most banks aren't willing to take that risk on people who have a checkered or no past when it comes to other banking relationships.

And personally, having once dealt with some check cashing folks, they easily equal the post office in surliness. Even taxi dispatchers are as a group nicer people, and they're the ones who tell you "20 minutes" for 3 hours straight and make you wish that Uber existed in your town.
posted by wierdo at 11:13 AM on January 30


The USPS should charge more for a stamp for a letter to Sochi, Russia than for one delivered to my neighbor across the street before they plunge headlong into financial manipulation.

They already do that. International postage is more expensive.


This is actually something I noticed a few people in my office having trouble with. Somewhere along the line with the introduction of the "Forever" stamps they got the impression that only one of those stamps was needed as postage for any letter-sized envelope, no matter where on earth the envelope was going.
posted by elizardbits at 12:03 PM on January 30 [1 favorite]


American Banker: Postal Banking: Maybe Not So Crazy After All
posted by the man of twists and turns at 11:53 PM on February 1 [1 favorite]


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