Democrats Alexandria Ocasio-Cortez and Bernie Sanders have a new idea they want to propose to Americans. They want to change the way we do banking. They say they have a new idea that will help the lower class and it’s called Postal Banking. This is a new system where you do more than use the post office to send packages. Now they would be able to hand financial transactions as well.
This new plan was revealed as potential new legislation by the pair. They also hope to cap credit card interest rates at 15%. This plan would give much-needed relief to low-income Americans who most likely wouldn’t be able to get a checking account at the larger banks or apply for loans.
“Post offices exist in almost every community in our country,” Sanders wrote in a blog post. “There are more than 31,000 retail post offices in this country. An important way to provide decent banking opportunities for low-income communities is to allow the U.S. Postal Service to engage in basic banking services.”
How the Post Office Bank Would Help
Banks only help those with means get a loan, open an account, cash their checks, and pay their bills. At least, that’s the assumption AOC and Sanders have. They say a post office bank would give the same opportunities to poor Americans. It could give them low-interest loans to help lift them out of poverty by starting their own business.
It will help in the same way other banks do, but without the fees. Imagine using the ATM with no fee taken out or a truly free checking account. Currently in the United States, the poor have these opportunities, but it doesn’t always turn out great for them. If they need a loan or an advance on a check, they often turn toward predatory payday lending businesses.
The Treasury Department Thinks It’s a Bad Idea
The Treasury Department doesn’t think this will be a good idea that will help any American. Mainly because the USPS is already strapped, in the red, and barely keeping their head above water. They would have no experience in helping anyone manage their own money. For these reasons, they are fully against the idea.
“Given the USPS’s narrow expertise and capital limitations, expanding into sectors where the USPS does not have a comparative advantage or where balance sheet risk might arise, such as postal banking, should not be pursued,” a report from the Treasury Department stated. Yet, this isn’t a brand-new idea.
Right now, Americans can go to a post office for money orders and small matters like that. In its early history, the USPS offered options like opening a savings account, but the idea was abandoned in the 1960s. The idea was proposed 5 years ago, but was turned down by the USPS, saying their main function was delivering mail, not as a bank.
Currently, the USPS is deeply in the red. Over the last decade, they have lost nearly $69 billion and haven’t had a profitable year over that time. Postmaster General Megan Brennan says they are currently working on a plan reform how they operate to help make the USPS profitable again. Banking doesn’t seem to be one of those options as of now.