Postal service crisis — California is ready to pilot a postal banking solution

The U.S. Postal Service (USPS) is under attack and at grave risk. But with that many Americans are awakening to both the value of the USPS and the manifest dangers of privatization. The crisis has also sparked renewed interest in postal banking, a win-win approach that could both make the USPS more financially resilient and provide badly needed financial services to tens of millions of Americans.

Over the past several months, this constitutionally enshrined and highly-regarded public institution has been sabotaged from both within and without. On the one hand, it has largely been left to fend for itself amidst a global pandemic and economic crisis. Specifically, while corporations and private sector businesses have received hundreds of billions in public support, USPS’s request for support has thus far largely fallen on deaf ears in Congress. On the other, new Postmaster General Louis DeJoyLouis DeJoyMore than half in new poll expect violence after Election Day Poll: 72 percent say postal service doing good job despite recent changes Third judge orders Postal Service to halt delivery cuts MORE (who is a major donor to President TrumpDonald John TrumpBiden campaign raises over M on day of VP debate Trump chastises Whitmer for calling him ‘complicit’ in extremism associated with kidnapping scheme Trump says he hopes to hold rally Saturday despite recent COVID-19 diagnosis MORE) has overseen a raft of policy and operational changes (such as removing, dismantling and selling off mail sorting machines) that has contributed to deteriorating service quality and widespread accusations of politically-motivated meddling in the upcoming presidential election.       

Moreover, these threats are not only linked to each other, they are also connected to a much longer effort to undermine the USPS, and public support for it, as a precursor to privatization and the wholesale transfer of valuable assets (especially real estate) to private hands. Most egregiously, in 2006 (during the Bush administration) Congress passed a law that required the USPS to pre-fund 75 years of its future retiree health care costs. As Sarah Anderson, Scott Klinger and Brian Wakam write, “this burden applies to no other federal agency or private corporation” and “if the costs of this retiree health care mandate were removed from the USPS financial statements, the Post Office would have reported operating profits in each of the last six years.”

Fortunately, across the country, people have been putting up signs in support of the USPS in their yards, buying stamps en masse, holding rallies and calling their representatives. Inside the USPS, postal workers have heroically resisted management’s efforts to dismantle their equipment and gut hallowed principles (such as not leaving mail behind), while legislators are holding hearings and ratcheting up their oversight of the agency. 

It is in this context that more people are seriously examining postal banking as an option that strengthens the economic sustainability of the USPS and would be especially beneficial to lower-income people and those who live in banking deserts or are forced to rely on predatory payday lenders. 

Earlier this year Sens. Kirsten GillibrandKirsten GillibrandBill to expand support for community addiction treatment passes House Meeting Trump Supreme Court pick a bridge too far for some Democrats Sunday shows preview: Lawmakers prepare for SCOTUS confirmation hearings before election MORE (D-N.Y.) and Bernie SandersBernie SandersDaily Beast reporter: Progressives feel alienated after Biden’s socialism jab Trump’s successes, foreign and domestic, override his bluster and PR blunders Congress fiddles while the US burns, floods, and ails MORE (I-Vt.) introduced the Postal Banking Act, which would restore financial and banking services to post offices throughout the country for the first time since the 1960s. “Postal banking will help us bring the same equality of service the USPS has for mail delivery to the financial system,” Gillibrand and Sanders contend. “Putting a public, nonprofit bank in each of the Postal Service’s 30,000 locations will bring low-cost banking services to people of every income level everywhere from rural communities to inner cities.”   

While Congress should pass the Postal Banking Act with haste, it seems unlikely to do so, especially in an election year. In the meantime, the USPS should press ahead with postal banking, which is likely within its current authority, starting with a pilot program (or programs). The House of Representatives recently passed an amendment to an appropriations bill that would provide $2 million in funding for such a pilot project, and the USPS’s 2016 contract with the American Postal Workers Union (APWU)