FedAccount
June 21, 2018 6:09 AM   Subscribe

Give Everyone Government Bank Accounts - "A new report co-authored by two Treasury Department veterans, 'Central Banking for All: A Public Option for Bank Accounts', argues that Americans should have an account at the Federal Reserve, just as banks do. They believe this would solve a vast array of problems at once, ensuring that everyone is included in the financial system, driving down retail costs for businesses and consumers, and even making recessions less likely."
Morgan Ricks and Lev Menand, who worked in the Obama administration, and John Crawford, a law professor at UC-Hastings, call their idea FedAccount. These personal accounts would operate like the accounts that commercial banks already have with the Fed—with all the attendant privileges. Whereas the average checking account draws 0.05 percent, federal reserve accounts earn interest equivalent to the federal funds rate—currently 1.75 percent. Americans wait up to two days for a check to clear, but thanks to the Fed, banks can instantly transfer money to each other. And while personal bank accounts are only guaranteed through the FDIC up to $250,000, Fed accounts can never default, no matter how large the account balance, because it’s the central bank that prints America’s money.

“The time has come to end this special privilege of banks,” the authors write. Every American, every business, every institution would have the option of a FedAccount, with all the functionality of a normal bank account, like debit cards, direct deposit, online bill pay, and mobile banking, and no chance of default. The authors see the U.S. Postal Service’s 31,000 locations nationwide as a good place to locate ATMs and provide teller services for deposits and withdrawals.
also btw...
The ominous trend of private provision of public goods - "Domino's is fixing potholes. Facebook is building a bridge. Salesforce is housing the homeless. It's good of these companies to do these things. But the fact that they're doing them may signal dysfunction in our economy."
posted by kliuless (33 comments total) 51 users marked this as a favorite
 
“The time has come to end this special privilege of banks,” the authors write.

I bet it hasn't, however much it should have. The only way anything like this proposal comes to pass is if it somehow channels massive amounts of money to the banks.
posted by Kirth Gerson at 6:14 AM on June 21, 2018 [12 favorites]


The Post Office would be the perfect place to establish accounts.
posted by nofundy at 6:22 AM on June 21, 2018 [43 favorites]


Re dominoes, salesforce, and FB: these activities say more about the funding and disposition of the marketing departments of their respective companies than they do about any on-the-ground reality. These things would have been good marketing stunts at almost any time and in almost any place in human history.
posted by cirgue at 6:41 AM on June 21, 2018 [3 favorites]


I don't think it's only for good PR. I think this is the leading edge of post-nation-state corporatocracy, which is, like, the "good" part of neofacism and such a common trope in sci-fi and cyberpunk fiction that we're basically primed for it already.

We'll go willingly, especially if the ramen stays cheap and Uber keeps teasing us with flying cars.
posted by rokusan at 6:59 AM on June 21, 2018 [2 favorites]


nofundy: Indeed, it is, and Sen. Gilibrand has a bill that would do just that.
posted by SansPoint at 7:30 AM on June 21, 2018 [8 favorites]


So rokusan, you're saying that taking the middleman out of the government's fiscal policy measures will be the Mark of the Beast?

In the era of ubiquitous surveillance you're going to have an account number, even if it's just something like a perceptual hash^ of the totality of surveillance records on you. The leading edge on this has long since passed by; the only thing left to do is try to make it more of a two-way street, where the records being kept on everyone can provide the average person with some small advantages rather than it all just devolving to more power and wealth for those at the apex of society.
posted by XMLicious at 7:39 AM on June 21, 2018 [1 favorite]


I think rokusan was responding to the thing about companies providing social services, not the banking aspect.
posted by protocoach at 7:42 AM on June 21, 2018 [6 favorites]


there are some amazing advantages listed in this article. it would be incredible for poor people to have post office access to a 1.75% no minimum balance checking account. And instant no delay no fee transfers? total insanity.

is the fed some evil empire and this is all a trick to get us to put our money there? like many other giant institutions of the modern world, i don't have the personal experience to comment specifically on this case, but i have observed that dinosaurs step on mice without noticing.
posted by danjo at 8:07 AM on June 21, 2018 [7 favorites]


... or we could just pass some consumer financial regulations that ensure that prepaid cards & bank accounts are fair.
posted by yarly at 8:12 AM on June 21, 2018 [5 favorites]


This proposal is amazing, and it's exactly what we need. And of course, it'll be quashed entirely or knee-capped and modified into something that's only half as useful.

The one (ONE!) fault of this proposal is that it's having banking run by the government, and that doesn't even sound like a downside to me, but enough people seem to think that government is bad that this proposal doesn't have a shot.

Why the fuck should we be mucking around with prepaid cards and "fair" Bank of America accounts when there's an option to cut out the BoA middleman and tap directly into the banking system as individuals?
posted by explosion at 8:17 AM on June 21, 2018 [4 favorites]


Wait, I thought this had been in place since 1963? :)
posted by genpfault at 8:44 AM on June 21, 2018 [1 favorite]


The campaign For Postal Banking has the backing the NYC DSA and could use your names on the petition

(Just a minor example from the wild, I had an X-ray yesterday, the copay doesn’t accept cash. I had no idea, how are you suppose to interact with healthcare without a credit or debit card then? What if you’re unbanked? )
posted by The Whelk at 8:53 AM on June 21, 2018 [10 favorites]


There is a certain risk here, that the government would end up hiring terrible unaccountable private companies to service the accounts...but I'm not sure it would be worse than the present situation.
posted by praemunire at 9:26 AM on June 21, 2018 [1 favorite]


Excuse Me Sir, Do You Have a Moment to Talk About Bitco..
posted by Damienmce at 9:40 AM on June 21, 2018 [3 favorites]


> Damienmce:
"Excuse Me Sir, Do You Have a Moment to Talk About Bitco.."

Grabs his Boring Company flamethrower...
posted by Samizdata at 9:47 AM on June 21, 2018 [4 favorites]


the government would end up hiring terrible unaccountable private companies to service the accounts...but I'm not sure it would be worse than the present situation.

As the proud debtor on a fairly significant chunk of student debt, I'd say Fedloan is slightly less shitty than the bank in terms of interface, and significantly more responsive overall.

I'm wholeheartedly in favor of Gillibrand's proposal.
posted by aspersioncast at 10:00 AM on June 21, 2018 [5 favorites]


I don't like it. Wholesale rates are wholesale because they're wholesale. The 1.75% rate at the fed does two things, it gives banks an in-built margin to run retail services and it makes sure they aren't penalized for keeping money they have to in reserve rather that out in the market earning money.

Look at CUs. You can't get 1.75% at a CU short of giving them >$10K for five years and they're the good guys of the banking system. You would kill them all. This would be the end of small to medium businesses being providers of credit as you wipe out their cheap money.
posted by Definitely Not Sean Spicer at 10:09 AM on June 21, 2018 [3 favorites]


Also, with things like "fair" checking accounts with zero fee basic checking it makes sure that the rich pay more to run those services. People like me who float four figures in a checking account miss out on way more interest than some person who leaves $20 in that account. As long as there's no fees on basic checking for poorer people I'm quite happy to subsidize that interest.
posted by Definitely Not Sean Spicer at 10:15 AM on June 21, 2018 [1 favorite]


I don't think they need to give 1.75% interest on post office accounts. Let the banks and CUs have that for their margins. Just make the post office account available to everyone, regardless of credit rating, without the minimum balance and other rapacious fees, and make them interface with the rest of the system for the minimal amount of services that the unbanked need. Like, for paying their bills. If I am living paycheck to paycheck, I'm not worried about getting 6 cents interest this month. What's killing me, is the $10 bank fee just to pay my electric bill, and all the other such fees getting piled on me every month.

Ditto the FDIC thing. If you have enough money in the bank, to reach the FDIC limit, you are extremely unlikely to put it in a basic savings account at the post office, even if it pays 1.75%. And you have banks falling over themselves to give you every kind of free service imaginable.
posted by elizilla at 10:28 AM on June 21, 2018 [23 favorites]


is the fed some evil empire and this is all a trick to get us to put our money there?

I'm absolutely in favor of better banking for everybody and really into the Post Office idea. But I also have read The Handmaid's Tale so did get a little chill thinking about this.
posted by MCMikeNamara at 10:31 AM on June 21, 2018 [3 favorites]


Corperations and banks have even less accountability and oversight AND a monopolistic control of the market.
posted by The Whelk at 10:55 AM on June 21, 2018 [8 favorites]


The retail clearance period for checking funds availability is also partly due to the banks using that float for profit. If customers of the USPS Federal Bank received eg a 1% rate when the fed rate is 1.75%, the bank still retains a margin to provide basic services. There's still an opportunity for a for-profit retail bank to offer additional services, whether that's better bill pay, more ATMs, lending, whatever. But having a federal bank for all Americans is a good idea.
posted by a halcyon day at 11:05 AM on June 21, 2018 [3 favorites]




The document seems to hand wave away the issue of who will make small loans to individuals and small businesses. “The market will provide,” indeed.
posted by monotreme at 11:51 AM on June 21, 2018 [1 favorite]


Which is exactly where a postal banking system could come in.

Anything that makes payday loan lenders (I:e loan sharks) suffer is good.
posted by The Whelk at 11:53 AM on June 21, 2018 [12 favorites]


The document seems to hand wave away the issue of who will make small loans to individuals and small businesses. “The market will provide,” indeed.

It didn't at all. It was pretty explicit in the expectation that those loans would still be the purview of our current banks, and that they'd lend by borrowing from the Fed (much as they can do now).
posted by explosion at 12:28 PM on June 21, 2018 [6 favorites]


I think rokusan was responding to the thing about companies providing social services, not the banking aspect.

I was, yes. As for surveillance, yeah, I was railing against the surveillance state back when doing so made people throw tinfoil (even on MeFi) and yet I also realize it's now too late to start trying to have privacy.
posted by rokusan at 1:07 PM on June 21, 2018 [1 favorite]


I don't know enough nor have I thought about the proposal enough to have an opinion, but I would note that the Federal Reserve Board members make salaries in the low six figures.

Private banks, too big to fail, well....
posted by BWA at 2:54 PM on June 21, 2018 [1 favorite]


I would note that the Federal Reserve Board members make salaries in the low six figures.

So do a lot of people (not, like, enough, but it's not exactly rare), what's your point?
posted by tobascodagama at 3:01 PM on June 21, 2018 [1 favorite]


I thought about this. What would happen if we removed private banks, get rid of all taxes. All govt spending would be predicated on interest paid by the companies who receive loans from the banks. cut out the middleman as it were.

Forget the "lend to private banks and citizens" No more private banks, only the fed.

What sort of interest rate of payback would be required to fulfill the same payment of taxes? I wonder...
posted by symbioid at 3:57 PM on June 21, 2018


Excuse Me Sir, Do You Have a Moment to Talk About Bitco..

A guy wandered into my Burning Man camp and was going on and on about cryptocurrencies. I said, "Fork your cryptocurrency!" He smiled and lifted an eyebrow. I don't think anyone else got it. :(
posted by sjswitzer at 4:41 PM on June 21, 2018 [2 favorites]


Post Office Banking is a thing in some countries. Canada phased it out in the late 60's, but there's some talk about reintroducing it. It's a good idea.
posted by ovvl at 6:12 PM on June 21, 2018 [2 favorites]


I just recorded three hours of me rambling about postal and public banking I will hope to link to soon but until there here’s the history of postal banking in the US
posted by The Whelk at 9:25 AM on June 22, 2018 [1 favorite]


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