The Bank of Wal-Mart?

It could very well happen…sort of…

With tens of millions of low-income customers lacking access to banking services combined with a retailer that wants to keep its customer base and generate as much profit as possible, Wal-Mart is looking into offering banking services to low-income customers:

The retail goliath on Wednesday announced it would offer customers checking accounts with no minimum balance and no fees for overdrafts or bounced checks. Those who get a direct deposit of at least $500 every month — a floor that includes many people receiving government benefits — will have the $8.95 monthly fee waived.

Since the company won’t have a federal banking charter, it is providing this service via Green Dot Bank, which is offering this service exclusively at Wal-Mart locations.

An interesting tidbit:

That Walmart is one of the few options available to poor customers looking for a cheap bank account is troubling, given the retailer’s profit motive, said Wallace Turbeville, a senior fellow at Demos, a progressive think tank. Unlike the Post Office, which some have considered as an option for low-fee checking, there’s no reason for Walmart and its partner bank not to take advantage of customers who have so little bargaining power, he said.

The USPS option is a non-starter.  The USPS is bleeding cash, has no capital of its own to get into the banking business and lacks the expertise required to successfully execute a business plan (it’s been out of the business for decades).  Also, the USPS is notoriously bureaucratic.  The USPS would need a partner willing to provide both its capital and expertise and would also need the same partner to demonstrate extraordinary amounts of patience with the USPS internal decision-making processes.

Not.Gonna.Happen.  The Wal-Mart haters can complain all they want.  It’s better than payday lending and it’s better than an option that won’t exist, at least not in the near-term.

Please do be so kind as to share this post.
TwitterFacebookRedditEmailPrintFriendlyMore options

246 thoughts on “The Bank of Wal-Mart?

  1. The USPS option is a non-starter.

    A rather harsh take.

    Alternatively, consider the fact that dozens of countries around the world successfully implemented postal banking. One billion people use postal banking according to the World bank; furthermore “After banks, postal operators and their postal financial subsidiaries are the second biggest worldwide contributor to financial inclusion” (also World Bank). In fact, up until 1967, the USPS used to do postal savings.

    If the US were committed to doing it, we too could implement postal banking. There is not some magic that these other countries have that the US lacks. The USPS is not some unique bureaucracy in the world, exceptionally incapable of offering financial services. For instance, there is nothing exceptionally incapable about the USPS Inspector General’s white paper “Providing Non-Bank Financial Services for the Underserved” from January 27, 2014. That’s already the contours of a business plan as to how the USPS could enter the financial services sector. Also, by the way, a sector the USPS has a toe in already given money orders and international money transfers.

    Walmart entering the sector might be a positive development (I’ll reserve judgment until more is out about their products and the fine print). Given the unique capabilities of the USPS (sites across the country, a fairly positive image, accessibility to the currently underserved), and also given the post’s public-minded mission there’s really good reason to pursue that avenue.

    (No links because of moderation, but google any of the quotes and they are easily located)

    Report

    • With regard to the USPS as a bank; perhaps my area is special, but the USPS rarely has offices/facilities that are conveniently located in retail/business areas. Or they have crap for parking. And the USPS has been (IIRC) actively shuttering locations, so unless the USPS gets a healthy infusion of capital, I don’t see how they can make themselves available to the underserved public.

      Report

      • it is definitely regional and variable, as my experiences are far closer to “the suggestion of making the usps a bank is so laughable that the realization someone might be serious about it causes several minutes of mild anxiety”.

        Report

      • I thought half the point of Postal Banking is that many of the USPS locations that are closing down are actually in really prime spots for low-income banking services, even if the local customers don’t really have much in the way of postal needs.

        Report

      • Most post offices are in bank deserts
        Fifty-nine percent of internally-managed Post Offices are in ZIP Codes with zero or one bank branch, illustrating that the Postal Service is geographically well-positioned to reach people with little-to-no access to retail banking services.

        From the IG’s white paper, which cites as its source the FDIC 2013 Summary of Deposits and the Postal Service facilities database, “Providing Non-Bank Financial Services for the Underserved”, page 6, link to pdf here: https://www.uspsoig.gov/sites/default/files/document-library-files/2014/rarc-wp-14-007.pdf

        Report

      • USPS has locations a plenty if you live in a major metropolitan area. Most Americans live in major metropolitan areas. I usually think of opposition to USPS and Postal Banking to be part of a culture war to piss on the urban dwellers (who tend to be minorities or the much dreaded cultural liberals of the upper-middle class.)

        I do think one of the greatest coups that the right-wing has ever done is to take class rage which would normally be directed at people like the Koch Brothers and turn it against upper-middle class liberals who don’t go to religious services very often and have different hobbies.

        Though I do wonder if both sides operates on different definitions of who the little guy is. I’ve been in many arguments with Tea Partiers who insist that they are really for the little guy who just who just wants to start a home luxury car business but can’t because of too many damn regulations.

        I don’t care about luxury car businesses and I am more concerned with workers. I have great concern for people who are injured on the job and then not given time off to recover, worked off the books to avoid paying overtime, or people that lose their jobs and homes because of reckless financial speculation while the speculators at top go away unpunished (see the recent financial crisis). Perhaps this is the divide between left and right? Perhaps it is impossible to have a system of policies that protects workers and one that protects or encourages Duck Dynasty types of businesses? Perhaps this is why Democratic politics is a combination of unionized blue-collar workers, minorities, and upper-middle class professionals (who are income wealthy over being capital wealthy)?

        http://nomoremister.blogspot.com/2014/04/david-brooks-bobos-in-fox-news-two.html

        Report

      • ” I usually think of opposition to USPS and Postal Banking to be part of a culture war to piss on the urban dwellers”

        i lived in nyc for fourteen years.

        did you ever go to the greenpoint usps before it got your kind of white people all up in it?

        did you ever go to the red hook usps, which may very well not even now have your kind of white people in it at all, due to location?

        south ozone park? richmond hill? bay ridge? (5th ave or 13th ave, can’t speak for the others)

        Report

      • Though I do wonder if both sides operates on different definitions of who the little guy is.

        I agree, but would put it a little differently. It’s possible for people to be “pro-worker,” as you say you are, and yet disagree on the best way to help workers. You say this:

        I don’t care about luxury car businesses and I am more concerned with workers. I have great concern for people who are injured on the job and then not given time off to recover, worked off the books to avoid paying overtime, or people that lose their jobs and homes because of reckless financial speculation while the speculators at top go away unpunished (see the recent financial crisis).

        I think it’s a mistake to assume–and you don’t come right out and say it, but it seems implied in that comment–that others who disagree with you on policy don’t also share many of your concerns here. It’s fair to argue that the consequence of whatever policy they support might make those issues worse, but there’s a lot of latitude between being mistaken on the best policy and simply not caring about workers, etc.

        True, there are rent-seekers aplenty who really do care more about subsidizing their luxury car business, getting payoffs for irresponsible financial activity, seeking out ways to limit access to their professions, or advocating for special government efforts to ensure them the livelihood they seem to think is there right. But even they–as self-interested as they are–might not necessarily be the cynics that it’s easy to see them as.

        Of course, there are also true cynics. But I find it’s probably better to assume, at least on the first instance, the relative good faith of one’s interlocutor rather than jumping to the “they don’t care about workers like I do” tropes.

        Again, you don’t come out and say exactly what I’m attributing to you. But that attitude does seem implicit in your comment. And that’s what I wish to call out.

        (P.S. Sorry. This is a drive by comment because I gotta go to work.)

        Report

      • I’ve been in many arguments with Tea Partiers who insist that they are really for the little guy who just who just wants to start a home luxury car business but can’t because of too many damn regulations.

        When I went to my 20th high school reunion, at a reception hall out in the country called the Hayloft (are we rural enough yet?), a lot of people wanted to see me because I was the only guy from our class who got a PhD. (Side note: I’m not the one who would have been expected to.) But what I found fascinating was how many of them ran their own businesses.

        The pretty ditzy girl who had all of us guys hear nothing at all in class one day because the middle button on her blouse had come undone, had bought a used dump truck right after high school, started hauling stuff, built up a fleet of trucks, then had recently sold her company and started an environmental cleanup company.

        The guy who could never sit still–who was, as he described himself, “not a bad kid, but the guy who, when someone suggested jumping off a roof, would actually go do it”–had started an excavating firm. The not-so-ditzy-after-all female hauled a lot of dirt for him.

        Others had started up various other businesses that I mostly now have forgotten, from lawn mower repair shops to auto dealerships.

        Sneers about “they want people to start up luxury car companies” give the impression that you don’t know these type of people. Whatever image you have of them, I guarantee it is radically incomplete, and if you spent some time talking to them and listening to their stories of developing their own businesses, I think you’d have more respect for them.

        As a final story, here’s one I heard from a county prosecutor in Michigan. A retired guy bought some property and to keep himself busy and make a little income wanted to build 5 or 6 homes on it, one by one, using the timber that was standing on the property. So he picked some home sites, and sought permits, but when the environmental inspector came out, he declared every chosen site as impacting wetlands and refused the permit. Now, whether there were real wetlands impacts or not, I don’t know, and the answer is not relevant to the story, so let’s assume the inspector was on solid grounds in making that determination.

        The property owner was distressed–he’d sunk his savings into this property, and now it looked like he couldn’t make any of it back. He’s looking at a much more impoverished retirement. So he runs into his friend, the county prosecutor, and over coffee tells him the story, just looking for someone to be sympathetic. The prosecutor said, “Let me handle this,” and he took the inspector out to the site and said, “Show me 5 or 6 places he can build.” The inspector said, “Oh, there, and there, and over there….” As the prosecutor noted to me, if the inspector wanted any environmental violations prosecuted in that county, he had to come to the prosecutor, so there was an implied quid pro quo here.

        Just because these folks are country bumpkins doesn’t mean they lack human dignity, are less than full citizens to whom the government should be listening, or don’t have real concerns about government actions that impact their lives–personally and economically–in negative ways.

        They’re not saints, and I’m not saying everyone should aspire to be them. But I’ll tell you true, I think my not-so-ditzy-after-all classmate did something more impressive than what I accomplished. I’ve had opportunities to start my own business, and I chickened out. Going to school year after year, that was pretty frickin’ easy. So they do deserve some respect.

        Report

      • James,
        funny how you talk about what is essentially government-related bribery…

        My acid test for “do you really understand small businesses” is “can you actually explain why small businesses would want Obamacare?” [not all do, of course, and some are even nonideological about it.]

        Report

      • I didn’t mean to piss on people who start their own businesses but I was noting what seems to be universal and historical on leftism v. rightism. As far as I can tell based on my reading of history, the lower-middle class/petit bourgeois were always naturally allied with conservative to farther right-wing politics than others. I think Marx made similar observations.

        I’ve read way too many stories about workers these days that echo Triangle like a McDonalds worker who suffered a severe oil burn but was then mocked by his manager and not allowed to take off from work to recover. He was told he could quit or continue his shift and come back tomorrow. That is the stuff that really gets by blood boiling and I think that there out to be laws and regulations to prevent workers from such abuse and indignity. There have been frequent discussions on this site on how regulations that protect workers often fall harder on small business owners (like the Duck Dynasty or home Luxury Car business types) and I remain unmoved. I still think protecting the dignity and decency towards employees far outweighs the benefits of a low-regulatory regime. Big Corporations would also probably like to get rid of regulations that mandate decency and dignity towards workers as well. I’ve seen plenty of big corporations get in trouble for worker misclassification and trying to get out paying over time.

        And I don’t see how the environmental wetland story proves tea partier concerns. I generally think people are supposed to do the environmental inspection before buying the property and protecting wetlands is important enough that a solid ground decision justifies a little anti-capitalism in my mind.

        Report

      • And I don’t see how the environmental wetland story proves tea partier concerns. I generally think people are supposed to do the environmental inspection before buying the property and protecting wetlands is important enough that a solid ground decision justifies a little anti-capitalism in my mind.

        Well, if you’re not going to bother actually reading the story…

        Report

      • Keep in mind I leave in the Seattle Metro area, arguably a major metropolitan area.

        Now it could just be that the places where I shop, being upper middle class, are areas not well served by the USPS, so Will’s YMMV may apply here. It is entirely possible that, as Creons white paper suggests, the USPS is well located in areas that could benefit from postal banking.

        And I have no philosophical objection to the idea of postal banking, I just doubt the USPS could pull it off without a large injection of capital, and I’d rather that not come from the tax payers (it might not be possible for it to come from the taxpayers, but I don’t trust that), because people seem to have a hard time being actually held accountable for wasting tax money.

        Report

      • ut I was noting what seems to be universal and historical on leftism v. rightism. As far as I can tell based on my reading of history, the lower-middle class/petit bourgeois were always naturally allied with conservative to farther right-wing politics than others. I think Marx made similar observations.

        Well, if one’s definition of lefitsm vs. rightism is that leftism = for the workers and rightism = for the bourgeoisie, then of course, members of the bourgeoisie would “naturally” be part of the rightism.

        I’m not so sure everyone agrees with that definition. Take, for example, Robert D. Johnston’s “Radical Middle Class.” At least according to him, the proprietary middle class has “radical”–by which he means pro-participatory democratic, pro-individual rights, anti-corporatist–potential.

        What the manager did in your McDonald’s anecdote is atrocious. But that anecdote, I’ll point out, doesn’t exactly follow from a point about petit bourgeoisie. McDonald’s is a bit bigger than most petit bourgeoie industries.

        But I suppose you meant that the people who you call “tea partiers” support scaling back or opposing the types of regulations that would make a McDonald’s a safer place to work, or perhaps give the injured worker more recourse, either through better workers’ comp laws, more robust enforcement of those laws, better OSHA-style regulations, or maybe policies that would make it easier to unionize, allowing the worker a way to file a grievance.

        Okay, but is there some way to address the issue without necessarily assuming the bad faith of someone who disagrees with you? There is an argument to be made that regulations tend to make it more difficult to run a business and make it more difficult to hire people. That argument often serves some nefarious end, but not all people who raise it hate workers. And it would be a mistake to assume that most of these people are happy when a McDonald’s employee gets injured and then mocked by his manager. That’s not an assumption you made, but I’m just pointing out that some people are decent, even those who follow a lifestyle or make choices different from yours.

        On a final note, there’s a goose/gander thing here. I’ve often in these threads made certain assumptions about you and the type of very affluent urban culture you tend to admire. Of course, I’m making assumptions about you and your social class. So I, too, have to consider that just because you disagree with me about regulations (although I’m not sure we’re as far apart as you think, if you perchance listened to what I actually support), you’re not evil or a snob or an elitist. You just have a different notion of what will work and what won’t.

        Report

      • I’ll point out, doesn’t exactly follow from a point about petit bourgeoisie. McDonald’s is a bit bigger than most petit bourgeoie industries.

        We cannot know that. McDonald’s is two things, a F500 corporation (definitely not petit-borgeoisie) and franchises owned by small business owners, who may well be. In the story above, that the manager could act in this way, I’d suspect the latter, not a corporate-owned restaurant. (I think most of the restaurants in the US are franchises, no?)

        Report

      • I actually thought about the franchisee issue. I do think the franchisee, acting as a contractor for the corporation means that the corporation bears some responsibility for the issue.

        But then….we’re all in the maw. So good point. I’m probably stretching the definition of corporation or “corporate capital” when I suggest (by implication at least) that franchisees are more corporate than non-corporate. So my bad.

        Report

      • And I don’t see how the environmental wetland story proves tea partier concerns. I generally think people are supposed to do the environmental inspection before buying the property and protecting wetlands is important enough that a solid ground decision justifies a little anti-capitalism in my mind

        It might not “prove” their concerns, but it does demonstrate the concerns aren’t always frivolous, that regulations sometimes don’t work as they’re supposed to and sometimes at cross-purposes to their end goal.

        Report

      • Now, whether there were real wetlands impacts or not, I don’t know, and the answer is not relevant to the story, so let’s assume the inspector was on solid grounds in making that determination.

        If he was on solid ground, does that mean it was or wasn’t a wetland?

        Report

      • Heh, nice catch. I wish I could say that was an intentional pun.

        Curiously, though, the question cannot be answered with the information given, as even seasonally wet terrain may be classified as wetlands. And perhaps that’s where the property owner went wrong–perhaps he didn’t see any water on his selected building sites, so didn’t anticipate that they might be seasonally wet.

        That’s all speculation, of course. It also sucks all the fun out of your comment, for which I profusely apologize.

        Report

    • First I don’t think providing a bank to folks is a legitimate gov’t function. Second, the USPS has trouble delivering the mail which is it’s job. We could let the USPS do dry cleaning as well but why do it?

      Report

      • I’ve had much more trouble with UPS and FedEx than I have ever had with USPS. In my experience, Priority Mail is the quickest and most sure way to get something across the country quickly. UPS and FedEx take at least a week and then they usually miss you and you have to drive to their facility after hours and wait on-line or have a package delivered to work and that take it home on transport, etc. USPS always has the package right in my apartment lobby.

        I swear the right-wing has some bizzaro version of the USPS that I have never encountered.

        Report

      • USPS as noted, already handles a substantial sum of money transfers through money orders both domestically and internationally. It really wouldn’t be that big of a step difference for a post office branch to let you deposit that into a capped savings or checking account on site as it is to let you cash the postal money order. More importantly they take these orders and the like and cash them for free, which is a substantial advantage over most cash checking places.

        Report


      • Three points.

        First I don’t think providing a bank to folks is a legitimate gov’t function

        1. So no more US Federal Reserve System then? Of course you are entitled to your view of what constitutes a legitimate government function and what doesn’t. I’d just remind you that the feds have been in banking, with good reason, since at least the Great Depression. Ensuring financial services provision for currently underserved communities just represents continuing in that vein.

        Second, the USPS has trouble delivering the mail which is it’s job. 

        2. I don’t think people readily understand how impressive the USPS is. Universal service across a continent-spanning nation, for the price of a first class stamp, is a really big deal. It is a kind of public commitment only a government can make. Also, the private carriers like UPS and FedEx use USPS for the last mile of deliveries on several significant products they offer (e.g. SmartPost, SmartPost Returns, Parcel Select, and Parcel Return).

        We could let the USPS do dry cleaning as well but why do it?

        3.I’m going to say with a high degree of confidence this isn’t going to be how you see it, but here’s how I see it. Financial services are not analogous to dry cleaning. To me, access to financial services are basically a human right. Financial services today, low dollar lending, check cashing, international remittances, can be a real burden for the currently unbanked and underbanked – and ultimately exclusion from mainstream financial services contributes to marginalization of communities that’ve been marginalized historically (look at median wealth in the US by race/ethnicity for instance).

        According to the USPS IG’s white paper (cites omitted),

        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. 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. In 2012 alone, the underserved paid some $89 billion in fees and interest.

        Postal banking offers a chance to help these households build wealth, at minimum by not exploiting people in difficult circumstances. A postal banker is free to have a public-minded vision like that. The private sector, as is evidenced by payday lending, is ok with bleeding people dry, structuring products to take advantage of common cognitive errors, and charging usurious interest rates.

        So no, I’m not interested in the government doing dry cleaning. A public sector actor in dry cleaning won’t contribute to keeping the pesky private sector dry cleaners, with a history of abusing underserved populations, within ethical bounds. Dry cleaning isn’t utility-like, or even intimately connected to as many aspects of well-being.

        Report

      • CC:

        1.You are really going to compare the federal reserve to retail banking? apples and oranges.

        2. Sure there are some places that private companies use the USPS but consider the fact that the USPS has a monopoly on mailbox delivery when you think about how much more business the private companies could do.

        3. Providing retail banking isn’t a gov’t function and besides why should a private businesses have to compete with a gov’t monopoly.

        Report


      • 1. Banks get a government bank but Joe Sixpack doesn’t? Or another way to put it, why is it a legitimate government function when serving financial services companies, but suddenly it’s no longer a legitimate government function for an average citizen? I’m not the one arguing it isn’t a legitimate government function, you’re the one who has to reconcile the discrepancy in your position if your ok with a Fed Reserve but think postal banking is fundamentally illegitimate. To me, macro stability is important, so is the well-being of low-income households.

        2.As is evidenced by my postal banking take, I’m ok with a mixed system. There’s a government actor and there are private actors; they provide consumers choice. The government actor has a public-minded mission that private actors may not. On the whole, consumers are better served.

        3. In the recent financial crisis the government deployed trillions to keep the financial services sector afloat. Partial government ownership of several of the biggest banks, honestly, how many degrees of separation is that from providing retail banking?

        Why should a private businesses have to compete with a gov’t monopoly?

        Because some segments of the population aren’t being served at all. And when they are being served, they get 300% or more APRs. Those same segments of the population have a history of being ill-treated by the financial services sector. Really, this isn’t nationalizing the commanding heights of the economy, 1980’s UK Labour Party type stuff. Plenty of countries manage to have both a public actor and private actors in precisely this space.

        (I was also particularly unconvinced by the original post’s “non-starter” take. We can split the atom and send a man to the moon, but a postal bank is too difficult.)

        Report

      • The US Postal service processes over 150 billion pieces of mail a year. 80K is significantly less than 1 percent. There are 8 million people in NYC. So 40K is less than 1 percent of the amount of mail NYC handles daily.

        Welcome to the reality-based community. Never mind you will never be able to comprehend reality.

        Report

      • I’d see more call for the gov’t providing a bank for folks if there weren’t FREE BANKS ONLINE. (Competent ones, too. HSBC springs to mind — do not get their credit card, but their banking accounts are competent).

        Report

      • The problem with the USPS is not that they can’t deliver the mail. They can. It’s not even that they can’t maintain themselves as a going concern. They can.

        The problem with the USPS is that they have to serve a commercial function while also fulfilling a political mandate. Congress has control of all the things that the USPS might do to make themselves more viable like raising postage rates (mailing a letter anywhere in the United States for about $0.50 is kind of absurd) or limiting delivery (no reason that getting male 4 days a week instead of 6 is a major imposition). Amtrak has the same problem, which is one of the reasons why our version of HSR stops in Wilmington, Delaware.

        A postal bank could work, but with financial services we have every reason to believe that there would be even more conflict between the commercial and political concerns.

        Report

      • I’d just remind you that the feds have been in banking, with good reason, since at least the Great Depression.

        I know you said “at least,” but let’s be clear here: The Federal Reserve was formed in 1913. It was not a response to the Great Depression, and the Great Depression in fact happened on its watch.

        I don’t think people readily understand how impressive the USPS is. Universal service across a continent-spanning nation, for the price of a first class stamp, is a really big deal. It is a kind of public commitment only a government can make.

        You understand that government isn’t actually magic, right? Nor is it some respository of great genius and competence unavailable to private sector firms. Nor is mail delivery a public good. It’s both rival and excludable, i.e. a private good. With annual revenues of around $70 billion, the USPS significantly smaller than some private firms.

        Thare’s really no reason the government needs to provide mail delivery. I suspect that you’re going to say that the government needs to do it because only the government will overcharge some customers to subsidize others, but that’s exactly why the government shouldn’t be doing it. There’s no market failure here. USPS cross-subsidization isn’t correcting extenalities. Instead it’s creating them.

        Report

      • Saul:

        We were having such a nice conversation, I don’t understand why you feel the need for personal attacks. Why do liberals like yourself keep talking about bringing back civility if you aren’t going to practice it? I guess liberal hipsters that pay hundreds of dollars for a pair of shoes don’t need to be polite.

        Report

    • Here’s a crazy idea. Let Wal Mart and USPS both run banks and let the poor people vote with their dollars, instead of us educated middle class types pontificating on what they really need.

      Report

      • I second Saul in supporting this, . I find this forum has a decidedly urban bias wherein a community of 50k people is considered a “small town.” And since Wal-mart is in every hick burg on the map then that means a Bank of Wal-mart can neatly plug the un-banked gap, amirite?

        Not really. Actually the nearest Wal-mart to where I live is at least 60 miles away. But we have a perfectly good post office downtown. So the real strength of the postal banking suggestion is the geographic ubiquity of the USPS. On the other hand, the strength of the Wal-Mart Bank idea is that po’ folks (like their employees, for example…) are already a huge part of their customer base.

        I’d be interested to see the details but it might very well be a fairly stand-up deal. Their ATM fees are already about the lowest you’re gonna find. I wouldn’t be shocked to learn that the “gotcha” is nothing more insidious than hoping you’ll spend some money while you’re there.

        I dislike Wal-mart as much as any other good, self-respecting liberal, but this doesn’t immediately strike me as necessarily part of their awfulness.

        Report

      • Road,
        While I agree that this actually seems like Walmart giving someone a square deal (hell, it does happen!), I would be much, much happier to talk about “filling in the gaps” if Walmart wasn’t running away from rural america as fast as it’s lillywhite paws can take it.

        Rural America just isn’t wealthy enough to support Walmart anymore, and it isn’t likely to get better anytime soon.

        Report

      • Is there some point that it would be better for communities to print local money to prevent being channeled to the likes of WM?

        Not that WM is bad or anything, just inherently efficient at vacuuming up loose dollars in local environments. I see the Bank of WM as just a further extension of the same.

        Report

      • Citizen,

        Some communities are trying to do something similar. But constitutionally they can’t make it legal tender, so people have to voluntarily agree to accept it. Good luck getting someone like me to trust it. And if I can’t spend it at Wal Mart, everything us about to get a whole lot more expensive for me.

        Also, trying to keep all your money local ultimately means less money coming in from outside. Not many communities can thrive with a purely local economy.

        Report

  2. That Walmart is one of the few options available to poor customers looking for a cheap bank account is troubling, given the retailer’s profit motive, said Wallace Turbeville, a senior fellow at Demos, a progressive think tank.

    Sounds like they needed to go dumpster diving for their mandatory “the other side” quote.

    Report

    • It’s also sort of silly. I mean there are lots of reasons not to like WalMart, but this is pretty clearly a situation where both the customer and the store come out ahead. Most banks can’t really make money from low-income customers without punative fees, but WalMart can just make money by selling them stuff. After all, it’s not as though other banks don’t have a profit motive.

      Report

      • You hit it on the head with the fee issue. If we want to regulate the banks to the point that they are operating almost like utilities, as opposed to wild cat oil drillers, they are going to turn to fees to generate revenue. And the lower the amount of your average transaction with the bank, the more the fees are going to cost you as a percentage.

        Report

      • jr,
        since when do we class banks as a growth industry? They should be getting a steady rate of return on “having a crapton of money”… just the way Metlife and other companies like that do.

        getting fees off depositiors shouldn’t be necessary…

        Report

      • If we want to regulate the banks to the point that they are operating almost like utilities, as opposed to wild cat oil drillers, they are going to turn to fees to generate revenue.

        Or they’ll exit the business. As a result of the new rules under Dodd Frank, the banks that were offering programs akin to what the payday lenders do all exited that business.

        And the lower the amount of your average transaction with the bank, the more the fees are going to cost you as a percentage.

        Hence the complaints about payday lenders. The fees have to be higher though. Simple math proves that out. Take a $200 loan and apply a 12% annual interest rate for 1 month (keep it simple say a 1% monthly rate). Who can make $2 on a loan and expect to turn a profit on it? Answer – No one.

        Report

      • They should be getting a steady rate of return on “having a crapton of money”… just the way Metlife and other companies like that do.
        getting fees off depositiors shouldn’t be necessary…

        Why are we comparing banks to life companies?

        Report

      • Dave,
        similar business models — if the criterion for “being the best bank” is “do you have the most money, and thus can take the riskiest risks in investments”… the same is true for “investment and insurance” companies like Metlife.

        I don’t think that banks really need to use fees to earn a small chunk of change… (obviously, one use of fees is to discourage “annoyance and human cost”).

        Report

      • , That only works if your customers have money to deposit. If your customers live paycheck-to-paycheck, you can’t invest their money. So the only way banks can make money of the poorest segment of our society is by charging fees.

        That’s why my Grandmother, who has a lifetime of savings in her bank accounts gets free checking, and my boyfriend, who works at walmart, has to pay for it.

        Report

    • Aye. It’s hard to see how this will be anything other than good in both the short and long run for people whose other options would be payday lending. I mean….yeah, Walmart’s got a profit motive, but last I checked, so did every financial institution imaginable. Difference is, Walmart’s market position in…..everything is to do things that result in the lowest possible cost to their customers. Here, its profit motive requires that it treat Green Dot as roughly as it treats its other suppliers. After all, if we’re being honest, Walmart’s profit goal here is in no small part to ensure that its low income customers have more money to spend on essentials at the store that provides essentials for the lowest price.

      Last I heard, having someone with both the incentive and ability to treat banks roughly was viewed as the key to properly overseeing the banking industry.

      Report

      • One of the criticisms I keep hearing of Wal Mart is that its demands on its suppliers are too harsh. In response to which I keep asking, since when do these folks care about corporations?

        Report

      • Likely as not, it would be in Walmart’s interest to make checking fees low and have the customers have direct deposits. Whatever the customers are spending now to maintain payday loans, etc. is money they’re not spending at Walmart. My guess is that their main calculus here is to have them stop paying those interest rates or check cashing fees and spend the extra at Walmart.

        Report

      • Oh, absolutely, but in the long run they also don’t want to see customers getting thrown into foreclosure, losing their transportation, etc., either. Regardless, though, their incentive is to ensure that the Green Dot locations are no more profitable than absolutely necessary to stay afloat, just as they do with their other suppliers.

        Report

      • Right, I think we’re in agreement in general, Mark.

        Also Green Dot’s already partnered with Paypal, for example, to do money transfers through their MoneyPak service. They generally seem to aim serving niche products that cater to people with relatively low income, or smaller sums of money, with prepaid ATM/debit cards, for example.

        Their business model is already made for the sort of discounted product offerings that Walmart pushes, and likely as not they’ll get some cut that makes sense for it to partner with Walmart.

        Report

      • Mark,
        Walmart’s market position in…..everything is to do things that result in the lowest possible cost to their customers

        … isn’t that family dollar? Seriously, walmart isn’t “bottom of the barrel”

        Report

    • This. Currently Wal Mart is one of the lowest cost providers of prescription drugs. They are also opening low cost primary care clinics. While progressives piss and moan about how government ought to do something–which is as much a case of wish in one hand, shit in the other, and see which one fills up first as I’ve ever seen–Wal Mart is the market at work seeing a need and filling it. Anytime someone uses the profit motive as an argument against business providing poor people with a service that the market regularly provides to the well-to-do is publicly announcing their insistence on ideology over an understanding of how markets function, and their intent to make the poor suffer for the ideologue’s own ends.

      Report

      • James,
        ” Anytime someone uses the profit motive as an argument against business providing poor people with a service that the market regularly provides to the well-to-do is publicly announcing their insistence on ideology over an understanding of how markets function, and their intent to make the poor suffer for the ideologue’s own ends.”

        You’re just as welcome to look at Walmart’s future business plans as I am, ya know? Rural America is not predicted to suddenly come into more money, and they’re getting poorer every year. Walmart isn’t going to stay in rural America indefinitely — because of the profit motive.

        Report

    • “They have few options, none of them very good, so let’s make sure they don’t get another option!”

      Is there a name for this argument? I see it come up all the time in the context of prostitution, organ sales, low-wage jobs, payday lending, and probably some others I can’t think of right now.

      Report

  3. I’m not real sure what the concern is here. The individual customers aren’t going to have a lot of bargaining power against the Bank of Wal-Mart (actually Green Dot Bank in partnership with Wal-Mart)?

    Do retail banking customers currently have a lot of bargaining power that no one has told me about? I make pretty good money and move a lot of money through my accounts each month. My bank could not care less if I pull my deposits and go across the street to their only significant competitor. It dictates terms and conditions of its accounts and I get to agree to them or I get to go across the street where I’ll be treated exactly the same way. As far as I can see, it treats its low-income customers this way, its middle-income customers this way, and its high-income customers this way. The only customers who get special treatment are seven- and eight-figure commercial accounts. They get, you know, free check upgrades.

    So really, is Bank of Wal-Mart (actually Green Dot Bank in partnership with Wal-Mart) going to do any worse by its customers than Stagecoach Bank, Bank Of The Americas, or MSNB (Massively Scary National Bank)? Because there aren’t really any other banks at all, are there?

    Report

    • No most banking customers don’t have any power. It just makes a good liberal sound bite for gullible folks that don’t think. Maybe Demos’ standards just aren’t that high?

      Report

    • Burt,

      As far as I can see, it treats its low-income customers this way, its middle-income customers this way, and its high-income customers this way. The only customers who get special treatment are seven- and eight-figure commercial accounts. They get, you know, free check upgrades.

      Not to disagree with your comment or even with what I’m quoting here, but even non-7-8 figure commercial account customers experience a differential in their bargaining power. True, they all have to agree to contracts of adhesion, but a lower-income customer, or a customer with a poor credit history, might marginally find it harder to get a bank that’s willing to offer a checking account to him/her. Anecdotally I’ve seen it happen where people are denied checking accounts. Of course, that’s just anecdote, and the margin might be thin, and as far as I know those people can usually get checking accounts.

      All that said, the answer, I think, is more options. And if a bank of walmart can provide that–perhaps with assurances and protections comparable to those offered at regular banks–then that’s a good thing.

      Report

    • Burt,
      I’ve noticed teaser rates, and there is a qualitative (and quantitative) difference between HSBC and “your local bank”. I got some decent pull at my local credit union for keeping an account around for a while.

      Banks specialize in different things, and you really do get a different value from some than others.

      My credit union gives “special treatment” (on things like wire transfers) for much smaller than 7figures.

      Report

    • As far as I can see, it treats its low-income customers this way, its middle-income customers this way, and its high-income customers this way. The only customers who get special treatment are seven- and eight-figure commercial accounts. They get, you know, free check upgrades.

      I tend to think the same way about the banks; however, with the credit card companies, I would include the higher-income customers (not just the ultra wealthy) with those that get preferential treatments (lower rates, teaser rates, 0% APR, etc.). It’s been a while but from what I’ve read, credit card issuers make substantial fee income on lower income borrowers and because of that, they can effectively offer more attractive options to their higher-income customers.

      It’s kind of bass-ackwards if you ask me, but I can understand the strategy.

      Report

    • While you’re mostly right, it’s worth noting that banks don’t *exactly* treat all income levels the same.

      Or, rather, they do, but their ‘equal’ treatment of all people is most designed to make money from poor people, which banks do not particularly want as customers, and thus don’t care if they piss them off in the long term.

      I.e., in other words, banks wish to make money off fees. They could either set up fees that impact everyone equally. Transaction fees, for example, or check fees. Or they could move to some non-fee system, like just charging for accounts. Which would also hurt the poor more than the non-poor, but it would be less slanted than now.

      Instead, they set up systems where poor people are inches away from falling into multiple overdrafts, and…that’s it. That’s basically the only fees they have. Oh, that and minimum balance fees.

      Why? Because they do not want poor customers.

      This is entirely understandable. Poor customers do not put much money in the bank, by definition. Thus the bank does not make much money from them. They are bad bank customers.

      The joke is, half the people objecting to postal banking seem to not understand that, and think banks would dislike losing their poor customers. No. No they would not.

      If banks *are* complaining about postal banking, and I don’t know that they are, but if they are, it’s because banks are realizing that their crappy customer service and their history of mistreatment means, with any non-standard-bank competition, they’d lose some customers they do want. (Like me. If I had *any* choice besides a commercial bank, my money would be there. And it’s not because *my* bank has mistreated me…but when I had very little money, other banks did…and my bank does exactly the same thing. It just hasn’t happened to me because I no longer have very little money.)

      Report

  4. A rather harsh take.

    Alternatively, consider the fact that dozens of countries around the world successfully implemented postal banking.

    I know. My guess is that somehow, someway those counties had 1) political support for the idea; 2) financial wherewithall to make it happen and 3) the ability to provide the expertise to get the operation off the ground. I don’t see a lot of (1) except from some lefties. The Post Office’s financials are a mess and seeing as it hasn’t been in the banking business in close to 40 years, it’s safe to say that it lacks the expertise.

    If you want to convince me that my take is too harsh, then please identify potential partners suitable for the U.S. Post Office. My take is that they don’t exist because the companies with the financial capacity and expertise to get into this business don’t need anything from the Post Office to get into it themselves.

    The USPS is not some unique bureaucracy in the world, exceptionally incapable of offering financial services.

    It doesn’t have to be a “unique bureaucracy”.

    https://www.uspsoig.gov/sites/default/files/document-library-files/2013/rarc-wp-13-011.pdf

    I suggest reading from the middle of page 5 through page 6. These are not characteristics of unique bureaucracies but rather the typical slow moving bureaucratic culture that puts its own interest at the forefront and is too slow to get out of its own way. What private sector entity would want to partner with an organization like this especially when this organization provides nothing of value?

    For instance, there is nothing exceptionally incapable about the USPS Inspector General’s white paper “Providing Non-Bank Financial Services for the Underserved” from January 27, 2014. That’s already the contours of a business plan as to how the USPS could enter the financial services sector.

    It’s an exercise in wishful thinking. The belief that the Post Office is suited to do this on the basis of a physical network of 35,000 or so locations is laughable. If the banks wanted to get into this business, they would know where the best customers are, would know where to open a location and be up and running before the Post Office gets through what will likely be a lengthy approval process.

    What is also amusing to me is the belief that a private sector partner will contribute the bulk of the capital and expertise and allow the Post Office to tell the bank how to run its business, which it will do because the Post Office would want postal banking to serve a public purpose above all else. This means profits will become secondary. If this isn’t a complete misalignment of interests between the Post Office and the capital markets, I don’t know what is.

    I’d just remind you that the feds have been in banking, with good reason, since at least the Great Depression. Ensuring financial services provision for currently underserved communities just represents continuing in that vein.

    The Feds were in banking before that but when they stepped things up during the Great Depression, the purpose was to help maintain the stability of the financial insurance (deposit insurance, above all else, works wonders to help stave off a bank run, which was something that sunk a lot of banks in the early 1930’s).

    Helping to keep the banking system functioning properly is not the same as providing services for the under-served and it’s not at all in the same vein.

    I don’t think people readily understand how impressive the USPS is. Universal service across a continent-spanning nation, for the price of a first class stamp, is a really big deal.

    It’s impressive except for the fact that it loses billions of dollars a year, has a business model that is facing all sorts of pressure between competitors and technology. It’s track record of moving quickly enough to adjust its business model to cope with these changes is awful. It can barely function within its own area of expertise and now we’re supposed to believe that they can operate a different kind of business better than the one they’re currently in? That’s asking a lot.

    Postal banking offers a chance to help these households build wealth, at minimum by not exploiting people in difficult circumstances. A postal banker is free to have a public-minded vision like that. The private sector, as is evidenced by payday lending, is ok with bleeding people dry, structuring products to take advantage of common cognitive errors, and charging usurious interest rates.

    This is exactly why it’s not going to happen. A postal banker that is free to have a public minded vision puts people above profits. One problem: the private sector, the sector where the capital comes from for this pipe dream, will want appropriate risk adjusted returns for the capital they invest into this. If your view represents the view the Post Office has (and I think it does), as an investor, I don’t touch this with a 200 foot pole. Not only would I think there’s no money to be made but the headache I’d get having to deal with the Post Office would be too much.

    In the recent financial crisis the government deployed trillions to keep the financial services sector afloat. Partial government ownership of several of the biggest banks, honestly, how many degrees of separation is that from providing retail banking?

    Plenty since the government’s deployment was only done to stave off a crisis.

    I was also particularly unconvinced by the original post’s “non-starter” take. We can split the atom and send a man to the moon, but a postal bank is too difficult.

    To be blunt, you haven’t convinced me either. In fact, the only argument you’ve made as far as I can tell is that I’m wrong because you want to be right. My argument is simple: 1) the USPS lacks the expertise and the capital to get into the postal banking business. Their finances are currently a mess and 2) the banks, the companies with the ability to make this happen for the Post Office, aren’t going to want to partner with it and why should they? The Post Office would want too much operational control and in the amount of time it would take to get decisions made, the banks could have already opened and operated on their own.

    My guess is that postal banking would eventually lead to Walmart partnering with USPS rather than Green Dot.

    If the Post Office runs postal banking the way it wants to do it, no one will partner with them because there will be no money in it for a private sector partner (and Wal-Mart is as much a pain in the ass as the USPS so you can see how that partnership would work). If anything, Wal-Mart would try to compete with it.

    Report

    • I would just add that if a USPS banking scheme truly is people oriented, then the additional revenues the USPS is looking for are going to be pretty marginal. If it actually brings in substantial revenues to the USPS, then it will be driven by the dreaded profit motive.

      There is room between the two extremes, and it is likely that the profit motive will be in force, but moderated by political requirements to be people oriented. That might be the best of both worlds, but it could also mean that the scheme ends up serving neither the public nor the USPS well. (In particularly, if USPS is required to keep fees low or pay higher interest, they will likely scrape their profits out through poor customer service.)

      That’s not to bash the USPS, which does a pretty damn good job, imo. That they lose money is in large part a function of 1) less stuff moving by post these days; 2) having their charge rates constrained politically; and 3) the ban on them developing non-postal products/services. Lots of firms have loss-leader services or products that they use to get people in the door (like a tire store that rotates your tires for free, regardless of where you bought them–thank you, Les Schwab!), and mail delivery conceivably (if rather problematically) could play that role (or at one time could have) for the USPS.

      So I’m not a USPS basher, but as a guy who’s studied bureaucracy a little it, this scheme–with it goals of producing revenue and being public minded–looks like a class case of tasking a bureaucracy with incompatible goals (like the National Park Service’s duty to both protect the natural environment and make it accessible to the public).

      Report

      • Yes, a good addition.

        Or allow them to deliver to a central location, where people pick it up. It’s been proposed that a local store could provide the office services, so the USPS wouldn’t even have to build its own location or hire full-time workers at a lightly used facility, but as far as I know, that idea’s been nixed.

        Report

      • I would add:

        (5) The USPS is required to pre-fund health benefits for future retirees for the next 75 years. It’s an exorbitant charge against the USPS’s income statement ($5 billion plus per year). This was mandated by Congress in 2006 and no other government agency is subjected to this requirement.

        Report


      • That they lose money is in large part a function of…

        4) Deliberately harmful rules requiring their pensions to be pre-funded decades in advance, rules that literally no one else operates under.

        Seriously, the USPS is not losing money due to random changes in the world. The USPS was, in 2006, attacked with a specific law that made it (No other part of the government, just it.) put huge amounts of money in pension funds over the next decade.

        And, yes, there’s some exaggeration of this issue on the side complaining about it, for example it doesn’t actually require saying money people not yet hired, and it’s for 50 years, not the imaginary 75 years people keep citing. And I don’t even really have an issue with the pension funds being filled in advance. (1)

        However, requiring the post office (and just the post office) to top off *50 years* worth of pension funds in a *single decade* was completely insane, and hard to interpret in any way other than a deliberate attack on the post office.

        And, regardless of the motive, that requirement was, single-handedly, causing the budget shortfalls in the post office. Luckily, it was a decade-long timeframe, and that decade is about to expire. Although I think it’s expiring slightly later because the post office did get a year-long deferral at one point.

        Without having to make those payments, the post office will stop having all the financial problems it currently has, and will be operating quite comfortably in the black. Mail delivery, at some future point, might become unprofitable, but that point is not here yet.

        1) Although I find it absurd we’re requiring *part of the US government* to do this, which presumably has pensions backstopped by the US government, and thus could just print money to cover them. Whereas we don’t require either private industry or other levels of government to do this, and they can go bankrupt and people lose all their pensions. There is one type of entity in the US that hasn’t screwed people out of their pensions in recent history, and that’s the US government.

        Report

      • For a long a complicated explanation of what actually happened at the Post Office, I just found this:
        http://www.savethepostoffice.com/how-postal-service-began-prefunding-retiree-health-care-and-fell-deep-hole

        And it turns out I was attributing to malice what can be explained by avarice. Basically, it looks like the USPS was misused to reduce the budget deficit, deliberately having to pay into a fund the GAO says *it doesn’t need to even pay into*.

        Long story short, the USPS could just pay current pension obligations as they come up, and by the time it needs more money for pensions (Decades later), the money already in the fund will have gained enough interest. We could literally solve this problem by saying ‘Just don’t pay the money’.

        But paying into the fund counts as incoming money in the federal budget’s balance sheet, so we’ve decided to do that instead. Likewise, the post office ‘borrowing’ from the US government to be able to pay money into this fund results in the post office having to pay this back with interest, which also counts as incoming money.(1)

        What an incredibly stupid and completely unneeded stupidity. Oh, but look, the budget deficit is smaller!

        1) I wonder how much money the USPS borrows from the US government (Which they then pay into a fund the US government has, which exists to pay pension obligations the USPS incurred) is money the US government borrowed from Social Security. All of that…is the US government. Is it just me, or is this system of shuffling money around somewhat silly?

        Report

      • 4) Deliberately harmful rules requiring their pensions to be pre-funded decades in advance, rules that literally no one else operates under.

        It wasn’t a malicious attempt to harm the Post Office when it was passed in 2006. Even if you relaxed the requirement, postal revenues have still dropped like a stone and the USPS would be at best break-even or still losing money. The Post Office’s problems are revenue driven more than anything else, as much as the pension fund obligations provide a convenient scapegoat.

        Seriously, the USPS is not losing money due to random changes in the world. The USPS was, in 2006, attacked with a specific law that made it (No other part of the government, just it.) put huge amounts of money in pension funds over the next decade.

        Declining revenue – $10 billion of it between 2007 and 2011. You can’t blame the 2006 law on that.

        http://about.usps.com/publications/annual-report-comprehensive-statement-2011/html/ar2011_financial_1.htm

        However, requiring the post office (and just the post office) to top off *50 years* worth of pension funds in a *single decade* was completely insane, and hard to interpret in any way other than a deliberate attack on the post office.

        That’s a very convenient coincidence supporting your argument now isn’t it?

        And, regardless of the motive, that requirement was, single-handedly, causing the budget shortfalls in the post office

        Next time you want to make a claim that can be supported by numbers, look at the numbers before you touch a keyboard. I have no patience for this. As far as I’m concerned, you’re making shit up. Stop. I posted the link above. That completely disproves the bill of goods you’re trying to sell us.

        Without having to make those payments, the post office will stop having all the financial problems it currently has, and will be operating quite comfortably in the black. Mail delivery, at some future point, might become unprofitable, but that point is not here yet

        This statement has no credibility and is not supported by any evidence other than the author’s wishful thinking. Declining revenue IS a financial problem and a serious one. Anyone with a basic business background knows this. Apparently you don’t.

        Report

      • DavidTC,

        That’s #5. Dave already mentioned it. And has provided a more compelling and balanced discussion of it. That is, he agrees it is a problem, but he doesn’t claim it’s the sole problem.

        Also, Hanlon’s Razor may apply.

        Report


      • Declining revenue – $10 billion of it between 2007 and 2011. You can’t blame the 2006 law on that.

        Uh, no, but I can pretty safely blame *the recession* on that, considering revenue was steady from 2007 to 2008, plummeted by 7 billion from 2008 to 2009, and slowly dropped by 1 billion in 2010 and 2011.

        And then I point you to the current information:
        https://about.usps.com/publications/annual-report-comprehensive-statement-2013/annualreport2013_031.htm

        Their revenue was steady for 2012 and went up 2 billion in 2013. Almost like it has something to do with the economy.

        And I point you to ‘P.L. 109-435 PSRHBF expenses*’, which is what I am talking about.

        Now, I will grant that saying it’s ‘single-handed’ causing the shortfalls was a bit much on my part. I was wrong there. Even without that, the post office is operating at slight loss. We are in a recession. But it is a small loss, one that could easily be fixed by allowing the post office to raise postage in less stupid ways.

        And part of the problem is that, by letting things be wrong for years, now the post office is required to pay all this back, and now pay *interest* on top of it, so the situation looks is even worse. It’s a textbook example of how to run something into the ground, deliberately or not.

        And, I will repeat: I am not saying that the post office will never run into problems. I am sure it will. At some point it might actually not be cost-efficient to operate.

        I’m just saying a good portion of its *current* problems are Congress-made.

        Declining revenue IS a financial problem and a serious one.

        The revenue of the post office *is not declining*. Here is the revenue over the past 5 years: 2007-$74,778, 2008-$74,932, 2009-$68,090, 2010-$67,052, 2011-$65,711, 2012-$65,223, 2013-$67,318

        That does not look like a ‘decline’ to me. That looks like random variations to me, with exactly one huge drop, right at the start of the recession.

        The problem at the post office is that costs exceed revenue, and have been constantly allowed to do so. No one has fixed that problem, and at least half the monetary problem there is that it is required to spend money on something completely pointless.

        Report

      • Uh, no, but I can pretty safely blame *the recession* on that, considering revenue was steady from 2007 to 2008, plummeted by 7 billion from 2008 to 2009, and slowly dropped by 1 billion in 2010 and 2011.

        Even if you blame the recession for the decline, there’s still a problem of having to explain why revenues yet to approach 2007 levels. How do you expect the Post Office to grow when it’s business model is facing significant negative pressures? Yes, 1 to 2% increases is technically revenue growth but it’s hard to make that argument stick when the bottom line is that it’s bleeding cash and has maxed out its borrowing capacity.

        Why do you think we’re even talking about postal banking? If the Post Office was a strong entity, it would be more than profitable enough to not have to consider branching out into new businesses.

        All the legislative fixes in the world are fine but the Post Office still has to execute and manage its way through the changes in its own business. You want to add more on top of that?

        Report

      • revenue was steady from 2007 to 2008, plummeted by 7 billion from 2008 to 2009,

        Can we get your source for that? I’m not finding it, and your source doesn’t have those years. (I understand you were probably trying to avoid hitting moderation by including too many links.)

        Almost like it has something to do with the economy.

        There’s evidence that’s not the whole story. According to Wiki,

        First Class mail volume peaked in 2001 and has declined 29% from 1998 to 2008, due to the increasing use of email and the World Wide Web for correspondence and business transactions.

        That fits the technological change issue I mentioned.

        Also, while I don’t doubt the recession played a role, the USPS itself doesn’t attribute their increased revenues solely to economic recovery.

        Revenue continues to improve as a result of the Postal Service’s January mail price increase, successful sales and marketing initiatives, and continued success in growing the package business. … Shipping and Package revenue was up 6.6 percent. Standard Mail revenue was up 5.1 percent, driven by a 0.9 percent increase in volume and the January 2014 price increase. First-Class Mail volume was down 1.4 percent, but the January price increase offset this decline, resulting in a 3.2 percent revenue increase….
        “We’re seeing momentum in our package business and continued use of direct mail as an advertising medium,” said Postmaster General and Chief Executive Officer Patrick Donahoe. “We’ve been effective in developing and marketing our products, and we’re improving how we leverage data and technology—all providing a higher return on mail for many customers and causing them to take a fresh look at the Postal Service.”

        So, volume is still going down in First Class mail, Standard Mail barely increased, but they were able to offset that with price increases, and shipping and packaging volume is up because they’ve been specifically targeting that portion of their business, and they’ve been trying to use technologically to boost efficiency.

        Now that doesn’t undermine your argument that the USPS can run itself successfully, if not politically fished with–but then I don’t think either Dave or I have argued that it can’t–but it undermines your “it’s only recession” narrative, and supports our long-term changes narrative.

        The odd thing here, is that Dave has not argued that the pension issue is irrelevant. In fact he mentioned it before you did. He and I are just saying it’s not the whole story, while you seem to want to say it’s the whole story, with a minor role played by recession.

        The problem at the post office is that costs exceed revenue, and have been constantly allowed to do so.

        Eh, who’s arguing differently?

        Report

      • Here are the statistics you’re looking for: https://about.usps.com/who-we-are/postal-history/pieces-of-mail-since-1789.pdf

        What is saying about revenues through 2008 is true. However, I don’t think we can realistically say that the decrease since then is purely or even primarily due to the recession.

        What happened was that businesses started finding cheaper and more effective ways of reaching consumers than direct mail. Direct mail won’t ever completely die out – as it becomes more scarce, its marginal effectiveness will increase and it will eventually hit an equilibrium if it hasn’t already – but it’s declined dramatically, from 103 billion pieces in 2007 to about 80 billion the last two years. The result is that not only has first class mail been on the decline for awhile, but the total number of pieces handled by the USPS is at its lowest point since 1987 despite a much larger population, and more mailboxes than ever before to serve. In fact, since 2006, there’s been almost a 30 percent decline in the number of pieces handled by the postal service, despite a growing population and despite what I assume is the increased use of SmartPost.

        Report


      • Also, while I don’t doubt the recession played a role, the USPS itself doesn’t attribute their increased revenues solely to economic recovery.

        I wasn’t really arguing they had ‘increased revenue’ in any meaningful sense. I’m not sure changes that small can really be attributed it to anything. I look at it as we had one drop in 2009, and after that revenue stayed steady around $66 billion, +/- $1 billion.

        As for whether or not they should have recovered by now, I don’t know. I’m one of those people who argue the recession is not over.

        But it is possible to argue that, while the drop was pretty clearly due to the recession, it should have started going up by now, and the fact it hasn’t is worrying. That said, it’s a pretty weird coincidence that the hypothetical upward revenue from the recovery is almost exactly countered by hypothetical downward revenue from technology losses.


        Can we get your source for that?

        Dave had the link to 2011’s history page, which goes back to 2007. Which is how I found 2013. (I knocked off the filename and tried 2013 at the end of the URL.)

        The problem at the post office is that costs exceed revenue, and have been constantly allowed to do so.
        Eh, who’s arguing differently?

        Let my try that sentence again:

        The problem at the USPS is that a specific, silly change was made that increased their cost for no real reason, and right after that, a recession hit that caused a large drop in revenue…and Congress didn’t do a damn thing about it for 6 years, resulting in a huge debt slowly accumulating.

        This debt looks worrying, but is neither an indication of problems at the USPS, or an indication of problems in the ‘moving letters’ business model.(1) Both of those *might actually* have problems, I do not know. But we can’t use the information we have to check that.

        1) It’s a rather obvious indication of problems in Congress, but we all already knew that.

        First Class mail volume peaked in 2001 and has declined 29% from 1998 to 2008, due to the increasing use of email and the World Wide Web for correspondence and business transactions.

        …which is interesting, but stops exactly when it might actually tell us something.

        I poked around a little on the website, but couldn’t find anything that graphed mail volume recently.

        Report

    • Which the postal bank might not happen for political reasons, the idea that they need to raise capital from private industry, or partner with them, is insane. The USPS is part of the United State government, which can print money, and already operates a bank with trillions in assets so wouldn’t even need to print money.

      Now, you’re about to say ‘There’s no way the government would do that, we’d make them partner with a bank’, but that is due to *political reasons*. You’re going to say ‘But the USPS doesn’t have access to that money’…and, again, that’s due to *political reasons*. It’s a law, it’s not etched into stone.

      There is no *physical* reason USPS couldn’t, right now, start operating a banking system, if the US government wanted that to happen. Without any outside partners or investment. It could just say ‘Here is a loan of billion dollars, run a bank with it. We’ll expect it back in twenty years.’.

      The only reason that wouldn’t happen (Which it won’t.) is that we are politically unwilling to pass a law to set that up. And we’re equally unwilling to do it as some sort of private/public partnership, which, as you point out, would just be a complete mess anyway, so I’m not sure why you brought that up. (That sounds like one of those ‘pre-compromises’, where the left does all sorts of nonsense to get right-wing support for something, and then doesn’t get the support anyway.)

      Report

      • Now, you’re about to say ‘There’s no way the government would do that, we’d make them partner with a bank’, but that is due to *political reasons*.

        Yes and no. The Fed does not literally print more money when it wants to increase liquidity. It buys Treasury securities and can also change the reserve requirement or play with the discount rate. The Fed is not just going to create a bunch of money and credit it to the account of a new bank. That would create more than political issues; it would create economic and policy issues.

        But sure, the government could create and help to fund, either directly from the federal budget or by selling bonds, some sort of policy bank. Lots of countries have that sort of thing. Again, though, this is about more than politics. Policy banks create a contingent liability on the government’s balance sheet. And they also create a big fat target for those special hoping to direct lending in this direction or that, which is a legitimate policy concern.

        By the way, I would personally love to see the government set up a postal bank if for no other reason than I am curious to see how many and from which of the current banking regulations the government would exempt this bank.

        Report

      • Which the postal bank might not happen for political reasons, the idea that they need to raise capital from private industry, or partner with them, is insane. The USPS is part of the United State government, which can print money, and already operates a bank with trillions in assets so wouldn’t even need to print money.

        In other words, you believe that it’s a good idea for the federal government to print or give an organization that can’t turn a profit and has a constrained balance sheet perhaps a few billion so it can enter into a business line that it hasn’t been in for close to 40 years? You also believe that it would be insanity for the USPS to partner with the only organizations that possess the competency to execute this grand plan?

        Let’s move away from your grandiose abstractions and please explain HOW you think the Post Office can successfully execute this plan.

        Now, you’re about to say ‘There’s no way the government would do that, we’d make them partner with a bank’, but that is due to *political reasons*. You’re going to say ‘But the USPS doesn’t have access to that money’…and, again, that’s due to *political reasons*. It’s a law, it’s not etched into stone.

        No, I was about to say “there’s no way the government should do that if only because giving taxpayer money to the USPS is akin to throwing it down a rathole”. I’ve already argued (albeit briefly) why the USPS can’t execute this strategy. However, you amuse me when you presume to know how I’m going to respond to you.

        There is no *physical* reason USPS couldn’t, right now, start operating a banking system, if the US government wanted that to happen. Without any outside partners or investment. It could just say ‘Here is a loan of billion dollars, run a bank with it. We’ll expect it back in twenty years.’.

        You have no idea if that’s true because you don’t know 1) which locations that US government would want to open and 2) whether or not those locations are currently suited to handle any additional uses outside of its standard mail operations. Not can you not make that claim, you are in no position to offer support to it other than pointing out the number of physical locations.

        Set aside your unsubstantiated claim and focus on the fact that there are a multitude of logistical and operational reasons why that won’t happen. Even if you can make the “physical” argument stick (which you can’t anyway), that you believe that the Post Office can get this up and running if only the government had the will to do it flies in the face with how the Post Office has historically operated. Welcome to the real world.

        The only reason that wouldn’t happen (Which it won’t.) is that we are politically unwilling to pass a law to set that up.

        You can’t identify the real reasons why it won’t work because your political worldview distorts your vision of reality.

        Report

      • Dave,
        for reasons you’ve listed above, the ability of the Postal Service to turn a profit has been compromised by reasons that are not of gross stupidity and mismanagement. We might give them the benefit of the doubt that they are either: currently capable, or could become so with relatively few changes of government (I presume we have tons of talented logisticians in the military, and I assume they get bored easily — I have heard Gen’l Clarke’s critique of Katrina and found it pretty solid.)

        Report

      • In other words, you believe that it’s a good idea for the federal government to print or give an organization that can’t turn a profit and has a constrained balance sheet perhaps a few billion so it can enter into a business line that it hasn’t been in for close to 40 years?

        It is amazing how almost no one here seems to have the slightest knowledge of *why* the post office’s finances are in such a mess. Specifically, the post office has been forced to pay large sums of money every year to the general budget to cover up part of the deficit, using the excuse of ‘pensions’.

        The post office is profitable on its own. It might eventually *become* unprofitable, but it is perfectly profitable now, once we remove the yearly liability that the government randomly imposed on it.

        You also believe that it would be insanity for the USPS to partner with the only organizations that possess the competency to execute this grand plan?

        Uh, I *DID NOT* say that. I said this: ‘Which the postal bank might not happen for political reasons, the idea that they need to raise capital from private industry, or partner with them, is insane.’

        Now, it is theoretically possible for that to be read as ‘the idea that the post office need to partner with banks, for any reason, is insane’. However, I think the rest of my post, being about the fact they are past of the US government and thus have money, makes it pretty clear that the idea that they need to partner with banks for *capital investment* what I think is insane.

        But, let’s read it wrong. That still means what I said was that claiming the post office *needs* to partner is insane, not that partnering *itself* would be insane.

        You: People need to eat ice cream to get their required levels of potassium.
        Me: That statement is insane. People do not need to eat ice cream. (By which I meant they don’t need to eat it for potassium, but did not clearly state.)
        You: You said eating ice cream is insane!

        For the record, I have no problem in theory with partnering with banks for operational experience. (1)

        But I have a major problem with the nonsense that the postal bank would ‘need’ investors who would demand to make their money back, which is, indeed, completely insane.

        1) To address the issue of if they *need* to partner with a bank for experience: It’s hard to lose money on the ‘banking side’ by operating a savings and penny-ante loan bank. To lose money, you have to do some risky things, all of which are in the categories of things most people think this bank shouldn’t be doing. (Recently, those things are stupid mortgages.)

        You can, of course, end up with so little business that the infrastructure or personnel costs make the bank unprofitable, but that’s the entire point of using the existing infrastructure and personnel. So it’s actually pretty hard to see how it could be any sort of disaster, or why a third party would need to come in to explain how deposit slips work.

        So I think that idea that the USPS would need to partner with a bank to know how to do this is wrong. (But it is not ‘insane’, it’s just somewhat wrong.)

        You have no idea if that’s true because you don’t know 1) which locations that US government would want to open and 2) whether or not those locations are currently suited to handle any additional uses outside of its standard mail operations. Not can you not make that claim, you are in no position to offer support to it other than pointing out the number of physical locations.

        What does that have to do with anything I said? Did you misunderstand ‘physical’ to think I meant ‘in the post office buildings as they currently are’? Why…would that vaguely be relevant? Of course the locations might have to have to have some changes to accommodate having a bank in them.

        Changes the US government has more than enough money to pay for.

        It is impossible for me to set up a bank. I do not have enough money, and I do not have any location I could set up said bank, nor do I have any money to buy a location.

        Meanwhile, it is entirely possible for the US government to set up a bank using the post office, without any outside help at all. Hell, it’s perfectly possible for the US government to set up a bank using the Bureau of Land Management. Banks merely require money to set up, and not a lot of money when compared to the US budget.

        I think you’re misunderstanding what a ‘political decision’ is. You might think that political decision is a *good* one, but that does not change the fact that it is a political decision, in much the same way that not invading Canada is a political decision. Political decision doesn’t mean ‘bad’.

        Report


      • The Fed is not just going to create a bunch of money and credit it to the account of a new bank. That would create more than political issues; it would create economic and policy issues.

        Well, no, but it doesn’t have to. Firstly, the amount of money a bank needs is so far below the Federal budget that it could be easily funded from there. We no more need to ‘print more money’ for a bank than we need to print more money for a Navy cruiser.

        But, more important, the secret of banks is: They only need additional cash reserves if they are loaning money.

        The postal bank could easily start as a pure deposit bank, which would require essentially no real bankroll. It would merely keep on hand the money deposited into it. (Or, presumably, buy treasuries with them, using the interest to cover the small cost of administration.)

        Normal banks can’t operate this way, of course, because it doesn’t make enough money to cover physical costs, much less make a profit on top of it. They have to loan money out, and make other investments. But post offices and postal employees already exist, and the point here isn’t to make money.

        Normal banks need capital up front, because they have to start making loans immediately, because loans are how they make money. Without the pressure of making money, the postal bank could slowly gain customers and, thus, capital. So later, at their leisure, they could enter the loan business.

        Report

      • It is amazing how almost no one here seems to have the slightest knowledge of *why* the post office’s finances are in such a mess. Specifically, the post office has been forced to pay large sums of money every year to the general budget to cover up part of the deficit, using the excuse of ‘pensions’.

        James and I discussed this long before you graced us with your presence. I provided a counterargument which you have yet to refute, nor can you. Revenues have taken such a beating that even if you drop the pension payments or reduce them, the Post Office is still not turning a profit.

        The post office is profitable on its own. It might eventually *become* unprofitable, but it is perfectly profitable now, once we remove the yearly liability that the government randomly imposed on it.

        You keep repeating things you can’t support. Either support your claims or don’t make them. My suggestion: pull the 10-K and run some numbers before you speak another word of this. I’m also waiting for you to describe how the current institutional structure that is the USPS management will actually be develop and execute a strategic plan of action in a quick enough time frame to make any kind of postal banking initiative meaningful. The USPS reminds me too much of the GM corporate culture before it went bankrupt.

        Now, it is theoretically possible for that to be read as ‘the idea that the post office need to partner with banks, for any reason, is insane’. However, I think the rest of my post, being about the fact they are past of the US government and thus have money, makes it pretty clear that the idea that they need to partner with banks for *capital investment* what I think is insane.

        Fine, but what’s even more insane is ignoring the fact that the USPS lacks the institutional capability to pull this off, which has been my point all along.

        For the record, I have no problem in theory with partnering with banks for operational experience. (1)

        1) To address the issue of if they *need* to partner with a bank for experience: It’s hard to lose money on the ‘banking side’ by operating a savings and penny-ante loan bank. To lose money, you have to do some risky things, all of which are in the categories of things most people think this bank shouldn’t be doing. (Recently, those things are stupid mortgages.)

        It’s easy to lose money if (1) the deposits are small and the amount of revenues they can make from those deposits is minimal and (2) it requires a large expense base and/or major capital infusion in order to reach a potentially small number of customers. There’s more risk in this than you may think. Business 101.

        But I have a major problem with the nonsense that the postal bank would ‘need’ investors who would demand to make their money back, which is, indeed, completely insane.

        Your problem is with the needing of investors or the idea that investors have the audacity to ask for a return?

        You can, of course, end up with so little business that the infrastructure or personnel costs make the bank unprofitable, but that’s the entire point of using the existing infrastructure and personnel. So it’s actually pretty hard to see how it could be any sort of disaster, or why a third party would need to come in to explain how deposit slips work.

        Just because you are completely incapable of seeing how things can go wrong does not mean that there aren’t risk factors. In our conversations, you have a very strong tendency to rely too heavily on your own authority, authority that is, to say the least, of questionable competence in an area of finance that you clearly do not understand. I won’t rely completely on my own authority but I’d like to think that almost 20 years in finance, real estate and the capital markets has taught me a few things.

        So I think that idea that the USPS would need to partner with a bank to know how to do this is wrong. (But it is not ‘insane’, it’s just somewhat wrong.)

        In other words…

        1. The government has money…the post office can get money for postal banking.
        2. Deposit slips are easy to do so any idiot at a post office can be trained how to become a friendly postal banker that helps to make the world safe from those unscrupulous Wal-Mart types.
        3. Oh look – a unicorn!!! (ok I kid, sort of)

        I think you’ll forgive me if I’m a little less than convinced at this point.

        You have no idea if that’s true because you don’t know 1) which locations that US government would want to open and 2) whether or not those locations are currently suited to handle any additional uses outside of its standard mail operations. Not can you not make that claim, you are in no position to offer support to it other than pointing out the number of physical locations.

        What does that have to do with anything I said? Did you misunderstand ‘physical’ to think I meant ‘in the post office buildings as they currently are’? Why…would that vaguely be relevant? Of course the locations might have to have to have some changes to accommodate having a bank in them.

        It’s relevant because the only argument that has even the slightest bit of strength coming from the Post Office is that it has the physical infrastructure to get a postal banking operation up and running. Obviously you didn’t read the white paper.

        Changes the US government has more than enough money to pay for.

        An exercise in wishful thinking.

        It is impossible for me to set up a bank. I do not have enough money, and I do not have any location I could set up said bank, nor do I have any money to buy a location.

        Meanwhile, it is entirely possible for the US government to set up a bank using the post office, without any outside help at all. Hell, it’s perfectly possible for the US government to set up a bank using the Bureau of Land Management. Banks merely require money to set up, and not a lot of money when compared to the US budget.

        More wishful thinking. Let’s just assume the chance of that happening is zero and remove it from the conversation.

        I think you’re misunderstanding what a ‘political decision’ is. You might think that political decision is a *good* one, but that does not change the fact that it is a political decision, in much the same way that not invading Canada is a political decision. Political decision doesn’t mean ‘bad’.

        What does this have to do with our conversation?

        Report


      • It is amazing how almost no one here seems to have the slightest knowledge of *why* the post office’s finances are in such a mess.

        This is really rather amazing. I gave 3 reasons, Kim added a fourth, and Dave added a 5th. Then you came along, and you “added” the reason Dave had already given.

        And then you accuse others of not having “the slightest knowledge”? It being Friday afternoon, at least where I am, I’m hoping what that silliness indicates is that you were able to knock off work early and hit the bar, because I’d hate to think you wrote that while stone cold sober.

        Report

      • But post offices and postal employees already exist, and the point here isn’t to make money.

        I don’t mean to offend postal workers, but the idea that current postal workers are going to agree to start doing a whole other function in addition to their current jobs literally just made me laugh at loud.

        OK, I may be offending postal workers.

        Anyway, how do you think banks work, even if they are only taking deposits? The need some way to receive deposits and keep track of balances and decide how to allocate their assets and how to manage liquidity. It sounds like you think a bunch of postal workers can just start taking cash deposits and keeping them in a safe in the back. Even a small credit union needs IT systems and people who know how to manage risk and people who know how to do the accounting and people who can do customer service and account management.

        None of this is all that difficult, but this is about more than mere political will.

        Report


      • Without the pressure of making money, the postal bank could slowly gain customers and, thus, capital.

        You do realize the USPS wants to enter this business for the purpose of making money? Precisely because they are in fact facing the pressure of making money? So your vision is of this happening in a fundamentally different political world than the one we have now, and for a fundamentally different purpose than what the USPS is looking at?

        And at a minimum they have to invest that money so 1) they don’t actually lose money on the deal, because just to break even they’ll have to cover their increased costs, and 2) they can pay some interest so their customers’ money doesn’t lose value too quickly.

        The USPS is most definitely not looking at this as a publicly funded public service.

        Report


      • This is really rather amazing. I gave 3 reasons, Kim added a fourth, and Dave added a 5th. Then you came along, and you “added” the reason Dave had already given.

        James, I don’t know why you are unaware of this, but often when writing a post, someone will post something else that *is not seen until after the original post*. Hence the reason I numbered it ‘4’, because I had not seen the previous posts. And I must point out that you (and Dave) did that in follow up post, pointing out I shouldn’t assume malice when I could assume incompetence…after I had already posted a correction to my previous post explaining that I had just read something that explained the purpose, which was neither malice or incompetence but ‘making the federal budget look good’. I didn’t mention this because, duh, it was obvious what had happened.

        And, just as relevantly, he said that in an entirely different thread, one I had not actually gotten back to yet anyway.

        However, James, you are right that Dave does, in fact, know this a major problem, so he is *not* part of the ‘almost everyone’ who seems unaware of this. I apologize for assuming otherwise, Dave. (Now, why Dave continues to think the post office is incompetent money hole, when he *also* knows the actual current problem that the post office is require by law to give large amounts of money to a pointless fund run by the US government, is unknown, but I will address that in a different post.)

        James, it’s only you, apparently, who was unaware of the fact that something like two thirds of the hole the post office is in is attributable to that law. That without that law, the post office would have an extra $35.5 billion, which would go a very long way towards reducing the problem. That should have been the very first thing on your list, and it wasn’t on there at all.

        Report

      • More wishful thinking. Let’s just assume the chance of that happening is zero and remove it from the conversation.

        I DIDN’T SAY THE CHANCE WASN’T ZERO. The chance *is* zero.

        You keep conflating ‘We are not going to do that.’ and ‘It is impossible to do that.’. Those are not the same thing.

        We are *not* going to set up a postal bank using just the post office. I completely agree with that statement. It will not happen.

        It won’t happen because, politically, we have chosen not to have it happen. It didn’t happen not because it was impossible, it didn’t happened because our political system didn’t want it.

        An additional question is if such a thing would be a money-sink (aka, slowly losing money), or would even be non-disastrous (Hugely losing money, or something like the ACA rollout.).

        I think you and I disagree about that, and we can discuss it further if you wish, but that’s not the same as ‘we can’t do it’. The Federal government has trillions of dollars, there is almost nothing it can’t do, financially. It can manage to operate a completely incompetent bank for centuries.

        You, meanwhile, seem to lean towards the Walmart route of contracting out. However, as you yourself pointed out, the incentives for banks are all wrong. I doubt that will happen either. (And if it does happen, I wouldn’t be surprised if it lasted a few years and then quietly went away.)

        Fine, but what’s even more insane is ignoring the fact that the USPS lacks the institutional capability to pull this off, which has been my point all along.

        They lack the institutional capability to pull this off *with their current resources*. I’ll agree with that.

        You put in people who want to do that, and actually provide enough money that the bank could get off the ground, and it could happen.

        Just because you are completely incapable of seeing how things can go wrong does not mean that there aren’t risk factors.

        Of course there are risk factors. But there aren’t any outside of the money spent, and the entire point of this thing is to constrain the money spent.

        Risking a billion dollars is something dangerous for the market. It’s not dangerous for the government. The government could pick a few locations, ones that need minimal changes, set up postal banking there, and see what happens. If it doesn’t work, well, it doesn’t work. The government would be out…some building changes and employee time, and that’s about it. (Like I said above, don’t even do loans at the start, so there’s no actual ‘bank risk’. Just checking accounts.)

        This isn’t the equivalent of launching a new bank from whole cloth, which is a huge undertaking. This is the equivalent of launching a new product line.

        Report


      • Anyway, how do you think banks work, even if they are only taking deposits? The need some way to receive deposits and keep track of balances and decide how to allocate their assets and how to manage liquidity. It sounds like you think a bunch of postal workers can just start taking cash deposits and keeping them in a safe in the back.

        A lot of people here keep talking like the USPS is not actually a subset of the Federal government.

        I’m pretty sure the Federal government can keep track of a few million dollars on deposit, and has the capacity to keep it safe. If not, they can always find it in their sofa cushions.

        As for liquidity….wow, everyone is really assuming that this would operate like a real bank. Instead of the somewhat obvious method of just having an amorphous blob of the Federal government’s money, or just having a lot of intragovernmental treasuries that it could just exchange when needed. (Frankly, I don’t see the point of even having ‘the USPS’ as the bank. Let’s just have the ‘Federal government’ do it, and the post offices merely the interface point.)

        Even a small credit union needs IT systems and people who know how to manage risk and people who know how to do the accounting and people who can do customer service and account management.

        The post office already has a ton of IT people, and frankly, a heck of a lot more customer service people than my bank. As for managing risk, I didn’t say it here, but I assumed that loans would be something that they slowly eased into, so not something to worry about at first.


        You do realize the USPS wants to enter this business for the purpose of making money? Precisely because they are in fact facing the pressure of making money? So your vision is of this happening in a fundamentally different political world than the one we have now, and for a fundamentally different purpose than what the USPS is looking at?

        Oh, my vision of this happening is…that this is not happening. I am not describing something that could happen politically. (But, then again, neither is the Post Office’s plan!)

        I know what the USPS thinks would be a good plan, and I find it amazing it cares about that instead of the actual problems, which is a) idiotic payments it has to make, and b) idiotic Congressional control over their pricing and micromanaging what they can sell, while also demanding they break even.

        You can either run the post office as a part of the government, with government oversight, and not try to break even, or you can spin it off and demand it make enough money, but you can’t keep telling it what to do *and* demand it make enough money when you don’t give it any way to do that.

        I also find it amazing the USPS wants to go with being a bank, which is a good deal more complicated than a lot of things. If I were in charge of them and trying to figure out how to make more money, I’d demand to be allowed to put in copy centers, which would be a really obvious extension of their core business.

        Report

      • I’m pretty sure the Federal government can keep track of a few million dollars on deposit, and has the capacity to keep it safe. If not, they can always find it in their sofa cushions….(Frankly, I don’t see the point of even having ‘the USPS’ as the bank. Let’s just have the ‘Federal government’ do it, and the post offices merely the interface point.)

        Ah, booting things up to the level of “the federal government.” In other words, moving away from the actual specificity needed to explain how this would work, as though “the federal government” as a collective whole does things, as opposed to specific discrete agencies.

        This is unicorn hunting at its finest–when we stop talking about specific agencies with with specific capacities (and specific lacks of capacity, and talk vaguely about “the government,” it can be anything we imagine it to be.

        Report


      • Ah, booting things up to the level of “the federal government.” In other words, moving away from the actual specificity needed to explain how this would work, as though “the federal government” as a collective whole does things, as opposed to specific discrete agencies.

        Uh, no, that’s not what I said. I was proposing we stop with the fantasy that the Post Office isn’t part of the Federal government, not that we make the vague ‘Federal government’ operate the thing.

        The idea of the USPS running out and purchasing treasuries with their depositor’s money, thus moving money between the Federal government and the Federal government, is silly. Put depositor’s money in the general fund, pull it out later, tada, the end. Forget treasuries, forget liquidity, forget all that stuff.

        In much the same way we pay taxes to ‘the government’, not ‘the Treasury Department’, we would have ‘the government’ hold our money, which would be administered via the USPS.

        Or, to think of it another way: In a way, the government would be issuing us bonds…without any interest at all, and can be exchanged at any time. (And you can also vary the amount in that bond, taking money out and putting money in, which is very confusing and why we can’t do it via actual bonds, and why I didn’t phrase it this way.)

        Report

      • Oh, and I’d like to issue a mild apology, or at least clarification. I think a few people here have taken issue with the fact that what I am talking about is not going to happen under our current government.

        And they’re right, and I would have mentioned that, saying something like ‘In an ideal universe where this could happen’…except I was under the impression we all knew that *none* of this will happen.

        I thought it had been generally agreed upon that the only way it could happen is there was a huge amount of money to be made from it…and there isn’t. Which Dave’s original post I replied to pointed out, so I thought we all understood that.

        I think we actually all agree to that, but people have, at various times, seem to think I was serious about trying to make this happen.

        To be very clear: I think the idea of postal banking is a good one, and there are various ways I think it could work even better that I’ve suggested…and none of them are going to happen, period, the end.

        Report

      • I’m sorry, David, but there’s much about government of which you are unaware. One of those things is that agencies function best when they have a clear unified purpose. Charles Goodsell calls “mission mystique”, following James Q. Wilson, who argued in Bureaucracy about the value of

        agreement about and widespread (if not enthusiastic) endorsement of the way the critical task was defined. When that definition is widely accepted and endorsed, we say that the organization has a sense of mission.

        When we give agencies multiple critical tasks, they are much more likely to become disfunctional. For example, everyone likes to blame Michael Brown for FEMA’s Hurricane Katrina failure. But a well-functioning agency can continue its function despite poor leadership, if it is well aquainted with its task. However FEMA had been shoved into DHS, and its training and planning resources had been redirected toward terrorism protection, so it had lost its focus on disaster response.

        So the issue here is, while it may seem simple, as you’ve described it, to add this other function to the post office, it’s not certain that you aren’t overlooking some complexities that, in conjunction with the mere fact of adding a second vital function to the post office’s responsibilities, will cause the the USPS to lose its sense of mission and become less functional at both tasks.

        My readings on bureaucracy–which I’m odd duck enough to consider a fascinating topic–make me much warier about these things, and quite dubious of what appears to me to be a rather naive optimism.

        Report

      • I am aware of that, actually, which is why I wanted to start with stuff that basically is just cashier stuff, which the post office already does. It’s why I’m rather dubious about trying to make postal employees into loan officials, or assuming that the postal service has the knowledge on how to hire loan officials. As much as I’d like to see that, that is a level of competence in a different enough field that I am worried it isn’t going to happen and/or distract from the core mission.

        But here is the list of things the postal service knows how to do: 1) Open a PO box for people, by confirming ID and presumably putting it all in computers, 2) Operate a cash register, accepting money for things, 3) Move around pieces of paper safely.

        From what I can tell, these are the basic skills required of bank tellers. Open accounts, accept deposits, and send checks to a clearinghouse. Like I said, basically, offering one more product.

        Now, as to whether just having ‘two missions’ would be distracting…it’s possible it would be. But we shouldn’t just assume it would be, or that having one ‘agency’ is relevant. Presumably, the bank would be structured as a *different* bureaucracy *within* the post office that would handle all the bank back-end stuff. (It’s not like the USPS is one giant monolith now. It’s got facilities and IT in there somewhere, I’m sure. Unless I’m mistaken, it even has some law enforcement somewhere in there.)

        And from what I understand, the problems with FEMA wasn’t that Brown incompetent, per se, or that FEMA had two missions. I always understood the problem was that FEMA decided that no one was allowed to help but them. And after claiming all authority for themselves, FEMA didn’t use that authority in any useful way. If FEMA had run around saying ‘You will do exactly what we say, and nothing more…now you, Army! Evacuate those people! You doctors! Set up right here!’ no one would be complaining. The problem is instead they ran around saying ‘You, doctors! Mop this floor!’ and ‘People have need to be evacuated for days?! We had no idea!’

        If their focus on terrorism had an effect, it was presumably due to the idea that, during terrorism, they would be the only people able to handle it, so assume they’re the only people competent at all. (Aka, a ‘bomb squad’ thinking, where everyone else is required to clear out.) That’s the only context in which some of the things they did made sense. So I see what you mean about a terrorism focus messing things up.

        Except that doesn’t really apply. The problem with FEMA wasn’t that they ‘lost focus’…it’s that they started doing the old thing, that they used to be good at, in a new (and stupid) way thanks to their new mission. But I’m not sure how the USPS would get confused between banking and postal service. USPS might lose focus in some abstract sense, but it’s hard to see how handling banking would affect mail delivery in any concrete sense. (Open a bank account, get some free mail!)

        And if having the ‘post office bank’ bank-end stuff handled within the post office causes that much of a problem, well, the important part is that postal workers can operate as bank clerks, at locations that already exist. The actual back end of the bank can be over in Treasury for all I care.

        (Please note in my universe we’ve stopped pretending the post office isn’t part of the government.)

        Report

      • Re: FEMA. That all is part of it, but not by any means the whole of it. FEMA was transformed by its incorporation into DHS into an anti-terrorist organization. Funding was shifted away from FEMA disaster response and toward terrorism prevention and response. FEMA lost 1 of its 3 emergency management teams, and before Hurricane Katrina, 75% of the funding it handed out to states and municipalities was for terrorism prevention and response. It was not just that they tried to do everything (although I have criticized that elsewhere as well), but that what they had once been able to do they were no longer prepared to do. It’s no different than a pianist who goes a year without practicing; the skills are rusty.

        The adding on of functions to an existing bureaucracy has happened frequently, but has often been surprisingly problematic.
        –When the Forest Service had to transform from an agricultural agency that made a crop–trees–available for harvest to an agency that had to engage in environmental protection at the same time they were wiping habitat, it became an incoherent and internally conflictual agency (although I, personally, prefer the newer function).

        –When the military, which is good at shooting people and blowing things up, was asked to perform peacekeeping and nation-building, it was markedly less effective.

        –In fact the military itself is hardly a coherent agency, but a collection of conflicting agencies with different critical tasks. They used to be separate agencies–the Department of the Navy and the Department of War–but were cobbled together into a single agency, along with the Air Force (originally the Army Air Force, but spun off because is critical task was distinct). They’ve rarely worked together efficiently, although they’ve improved considerably in the last decade–it only took them half a century to actually do such simple things as ground to air communication between the different branches in real time on the battlefield.

        Re: USPS. The above is why I remain skeptical–not unalterably opposed, understand, but very skeptical. All my study of bureaucracy is making warning signals go off, because the history of these ideas of combining tasks in an agency demonstrates that it’s almost never as easy as it sounds.

        I do appreciate you are trying to keep it simple, and give them only the most basic tasks, and that is indeed the way to go. But even with the clerks there’s a bit more complexity. It’s not just receiving money and making change. Currently all the money they receive goes into the same system. Making them handle bank accounts means shuttling money into different accounts, which sounds simple, but is already adds a complexity above what you’re suggesting. Maybe the smart thing to do would be to have a dedicated counter, so they’re not switching back and forth between different programs on their computers, but then you either have people shuttling back and forth, an inefficiency, or you have a dedicated clerk, in which case it’s not clear why the USPS has to be doing this, rather than a dedicated agency just using USPS space.

        Also, l’m dubious about your assumptions about the back end. “They have IT guys, so adding another IT function is not difficult” strikes me as something on which we’d like to have our IT folks here add their two cents.

        Also, while I understand you’re operating in a theoretical political world where the USPS isn’t bogged down by political handicaps that keep it a money-loser, I think to talk about a postal bank seriously we have to address the real world issues. You see it not as a revenue stream for the USPS, but as a pure public service, but how likely is that to be how it’s really set up? Unless you can eliminate political pressure for such a bank to be if not profitable at least revenue neutral, rather than a de facto welfare program, then in fact it actually cannot function as simply as you’re suggesting.

        I’m also skeptical about how many people will want a bank that doesn’t pay interest, and the ability to pay interest requires the bank to receive interest, which requires loaning/investing. That’s assuming away most of the political pressure, and putting it in your preferred political world, but not assuming political pressure away to the extent that the public would accept their tax dollars going to pay interest on poor people’s deposits.

        You keep saying it’s simple, but I see a lot of unanswered questions still. That, combined with the historical reality that the combining or compounding of agency tasks is rarely that simple and effective, leaves me a skeptic, even though I recognize that you’re trying to keep it as simple as possible. I just think there’s more there than either of us has sufficient knowledge to imagine.

        Report

      • or you have a dedicated clerk, in which case it’s not clear why the USPS has to be doing this, rather than a dedicated agency just using USPS space.

        I don’t have any objection to a dedicated agency doing this, using the USPS space, although being able to use some of the USPS’s people would be a large bonus. OTOH, I think people are overestimating the amount of interaction with customers that these bank tellers would have.

        95% of everything, from depositing checks to withdrawing cash, would be presumably done via ATM. Bank tellers are needed to open accounts, verify identity, and reset PINs, and accept the very very rare cash despot. That’s what the tellers need to do.

        The rest of it can be handled offsite, via some dedicated personnel. And at the ATM.

        There are banks, right now, that only exist online. The thing that stops them from really catching on? Lack of ATMs, so they have to rig up weird rules about paying back other use of other bank’s ATMs, and problems with depositing checks, again due to lack of locations, which can be solved via ATMs.

        (And depositing checks is a big problem for the poor, because often they work exactly the jobs that don’t do direct deposit, or even have hand-written checks.)

        You see it not as a revenue stream for the USPS, but as a pure public service, but how likely is that to be how it’s really set up? Unless you can eliminate political pressure for such a bank to be if not profitable at least revenue neutral, rather than a de facto welfare program, then in fact it actually cannot function as simply as you’re suggesting.

        I actually think an argument for the public service can be made on ‘government should protect property rights’ grounds. Namely, that people should have a safe place to put their money. They should be able to turn their money over to the government and say ‘I’d like that back, later’.

        Granted, that isn’t exactly the same as the right to a debit card, but I think there’s actually a ‘this is what government should do’ principle there with keeping people’s possessions safe.

        I’m also skeptical about how many people will want a bank that doesn’t pay interest,

        Oh, that one is easy to answer: The same people that WalMart is targeting.

        There’s an entire class of people where, in their mind, banks do not exist to earn interest. They have, literally, never gotten more money out of the bank than they put in, and usually the money flow is completely reversed with fees and whatnot.

        They want banks as a place to safely store their money and deposit paychecks without having to pay a fee. They are the ‘unbanked’. They are people who, right now, pay money to load up on cash cards, because they need something that works as a credit card, but banks will not allow them to open an account, or at least not keep one open.

        Report

      • To address the ‘rights’ thing for a second: We live in a country that has decided that enforcing the property rights of banks is more important that people. I.e., it is a bigger (And Federal!) crime to steal $200 from a bank than to steal $200 from some random guy.

        I’m not, in any way, complaining about this. We also regulate banks more, and then we subsidize them, then we require them to buy FDIC insurance, bank robbers were a specific type of menace without Federal response, etc, etc. I’m not trying to say ‘banks vs. people’ is unfair.

        But the end result of all this is that people outside the banking system don’t get the same level of protection for their money(1). This means people that the banking system refuses to serve, or only will ‘serve’ in ways that are clearly malicious and designed to take as much money from them before they are run off, *cannot* get the same level of legal protection for their money.

        If, under the law, we have decided to treat a specific and arbitrarily delimited type of money as ‘legally more important to protect’, all people should have the right to put their money in that system. If the US government thinks money in banks is special, *all people have a right to put their money in banks*.

        This, as conservatives will immediately point out, doesn’t mean they have the right to use any specific, privately-owned bank. Fair enough.

        And thus the logical conclusion is…

        1) I am merely talking about ‘legal protection’, not the actual physical protection banks provide. People can’t get that either, but that’s a much weaker argument, because the government is not providing banks with vaults.

        Report

  5. IF government must play a role in getting banks to rural areas, may they PLEASE play a role in enhancing competition, not just enabling a monopoly?
    To whit: many corporations (ING and HSBC spring to mind) have online banking. If there is not enough secure internet access in rural areas, might not the government work to provide THAT, rather than a brick and mortar store?

    Report

    • To whit: many corporations (ING and HSBC spring to mind) have online banking. If there is not enough secure internet access in rural areas, might not the government work to provide THAT, rather than a brick and mortar store?

      I’d support that. I’d also support ways to get the government and the banks to work together and address the under-banked population (for good or bad, and I know I’m going to catch hell for even bringing this up, the government-business collaboration was necessary to get the ACA passed).

      Report

  6. @saul-degraw

    “Show me 5 or 6 places he can build.” The inspector said, “Oh, there, and there, and over there….”

    THIS! This is the major failing of regulation! If not entirely in practice, then certainly in perception.

    Why do all the bureaucrats who enforce regulations seem to feel that their sole & defining job is to say NO! I hear stories like James’ all the time, but without the happy ending. Part of the stated goal of government is to encourage the growth of the economy while also protecting the commons. To me that means that if an inspector comes out to asses something for a potential business, they should do so with an eye toward both ends of the problem. They should want to help people find a way to realize their goals while protecting the commons, if at all possible.

    Instead, the general feeling I get is that the regulator says no, and unless the citizen has the resources to hire a good lawyer & firms that specialize in finding ways around regulation, they are SOL. And if they do, then what could be a pleasant cooperative relationship becomes a bitter adversarial one* (which, on the plus side, helps breed more & more libertarians, every day, but that is besides the point).

    *I know that there are always people who chaff at any regulation & are excessively unreasonable, but I expect that such people are the margin, not the norm.

    Report

    • For the same reason that the only time you ever hear about an airplane, they crash; the millions of encounters with regulators who are reasonable and accommodating are unrecorded, while the ones that aren’t, make headlines.
      And given the revelations about regulatory capture by the powerful, the notion that we face too many or too powerful regulators seems misplaced.

      Report

      • The fact that there appears to be a large & healthy business sector that specifically exists to help people navigate regulation, I think they possibility of there being a majority of experiences of helpful regulators we just never hear about is pretty slim.

        Report

      • ,

        Much depends on what we mean by “regulators.” Studies show that most people are in fact satisfied with their interactions with government bureaucrats, despite Department of Motor Vehicle horror stories.

        But in a sense most bureaucrats aren’t “regulators.” That is, they’re not really in enforcement, and a lot of their actions are totally non-discretionary. E.g., the clerk at city hall where I go to sign my kids up for the city swim team has no actual authority. As long as I write the check she has no choice but to sign up my kids.

        It’s the actual regulatory ones where people often have problems. And the causes are twofold. One, the regulations themselves are often beyond most people’s comprehension. Two, with the lack of competition, there’s damned little incentive for gracious customer service.

        You get it sometimes, because some folks are just decent, but it’s internal, not an external incentive, which means there’s little to motivate those who don’t have that internal motivation. The concept of “public service” does damn little to motivate people to proper behavior, while a touch of power is readily corrupting to a great many, albeit not all folks.

        And given the revelations about regulatory capture by the powerful, the notion that we face too many or too powerful regulators seems misplaced.

        1. The complexity of regulations is part of regulatory capture. The big private actors effectively help write the complexity into the ruled, because they have the resources to hire labor to help them navigate it, exploit loopholes, and challenge it in courts. Small players don’t.

        2. Although you appear to recognize that regulatory capture is common, and express doubt about the actual power of regulators, I’ve not noticed that you’ve become less than strongly pro-regulatory state. Are you by any chance a corporatist?

        Report

      • Again, we seem to be asking a false question- “Is there too much/ too little regulation”; its that idea that government is simply a slide dial, going from zero to total.

        The reality is that we have both too much and too little regulation, depending on the situation.
        When we look at dysfunctional societies in the 3rd World, we see this dynamic- the police are extremely effective in quashing society wide dissent, but can’t solve a simple purse snatching.

        The idea that regulatory capture by powerful interests means we should get rid of regulation seems absurd- like saying the mob has co-opted the police, so we need to get rid of cops. There does exist such a thing as effective policing, safeguarded from capture.

        I would gladly compare the customer service of any government agency against Comcast, Time Warner, Blue Cross or any other massive corporate entity.

        Report

      • That’s a good point, . Particularly that last paragraph given that the OP was about Wal-Mart doing a thing vs. the USPS doing that same sort of thing.

        Report

      • Again, we seem to be asking a false question- “Is there too much/ too little regulation”

        What do you mean by “we”?

        This looks to me like a cheap rhetorical trick employed to avoid dealing with the substance of your correspondents’ arguments by falsely reducing them to a simplistic trope that you can then dismiss as being too simplistic.

        Report

      • Yeah, what is this “we” crap. Did I say anything in this thread regarding the amount of regulation?

        No, my comment was that regulators are not known for providing guidance with regard to the regulations they enforce except to say ‘No’. Our regulatory system is, as noted, not setup to encourage regulators (the enforcement arm) to work with individual & smaller actors.

        Large players (like, say, Goldman-Sachs) seem to get all sorts of help at times, but smaller players, well, if they get lucky they find a helpful regulator.

        Of course, if we had a body of regulations that were clear & understandable by someone with an average High School reading ability, this might not be as much of an issue. But since that is not the case, we should have incentives built into the system for regulators to have as part of their mandate the duty to help citizens navigate the morass as much as possible while staying legal. They are the experts, so they should get it right*.

        *Obligatory mention of the annual tradition of some news station or think tank submitting the same tax return to different IRS auditors & getting significantly different answers every time.

        Report

      • I think there’s a valid argument to be made for “too much regulation” in some contexts — regulation isn’t free, and there’s a point at which the sheer number of regulations can become unmanageable even if every individual item is sensible on its own.

        But given that my paycheck comes largely from helping our clients deal with unmanageable federal regulations, I’m not going to complain about it too much.

        Report

      • OK fine- If what you guys are suggesting is that we need regulations that are more clear and actions taken to restrict the power of large players to capture the system, then we are all in agreement.

        Report

      • I think what you will mostly find is that a person of average intelligence has no trouble starting a business, as long as it is small. Where it gets tricky is trying to get something big (as in healthy capital investment) off the ground, or trying to grow a business beyond a certain point. That is where a small business owner has to start wading into the morass.

        Now, I could see a threshold where a company is large enough that a given regulatory body is unable to effectively assist it, but then I would expect it to follow the example of companies like Boeing, and help it to foster local SMEs (Boeing has employees who are paid by Boeing, but who answer to the FAA to some degree – they are authorized to make sure Boeing meets FAA regs & sign off on things, with the caveat that if they screw up, they are in trouble).

        Report

    • in the case of land use and zoning in particular, I suspect part of the reason this happens is that the property owner bears the full cost of the restrictions — no skin off the inspector’s nose (or the town’s, the state’s, etc.) if he’s just effectively reduced the value of the owner’s property by tens of thousands of dollars, and most of the time the neighbors probably prefer it that way (until it’s their own turn to be denied).

      Not sure you can generalize to all regulations in general, though — where the regulated area is a particular industry, regulatory capture is probably more common than regulatory overreach.

      Report

  7. In Canada, the Loblaws grocery company offers banking services under the label PC Finaincial. Same kind of deal, as I understand it – most of the standard banking services are actually administered by CIBC. Banking is online, by phone, or at ATMs and banking kiosks all of which are located in Loblaws grocery stores. They offer chequing accounts without fees or minimum balances, but at practically zero interest.

    They started doing this in 1996; as far as I know it’s working out pretty well.

    Report

  8. I am agnostic about WalMart partnering with GreenDot, but wrt the USPS, the reasons for its declining revenue appear to me to be also stupidity or malice- is there a reason why Congress won’t let it raise rates? As someone else mentioned its insane to think that any entity can deliver letters nationwide for 50 cents.

    On the political angle- When you compare USPS (government, unionized), UPS (private, unionized), and FedEx (private, nonunionized), their rates are very competitive. So the idea that there is something magically incompetent about USPS is absurd.

    Report

    • is there a reason why Congress won’t let it raise rates?

      Yep, constituents get mad. We, the people, think the USPS is supposed to be a public service. And lo, and behold, when it operates like one, we, the people, get mad that it’s losing money.

      We, the people, are an ass.

      Report

    • While I agree with all of this, it’s worth pointing out that Congressional control over the post office’s inner workings is very much a reason why we should be skeptical about its ability to do banking. I think complaints about the post office’s competence are usually quite unfair, but the competence of its administration is quite beside the point, or at least ought to be – the post office’s bigger problem is that Congressional/Executive meddling and oversight provides it with little to no ability to timely respond to changing market conditions. It can do relatively little to respond to conditions without first getting the approval of the PRC, which are a bunch of political appointees whose job it is to protect their respective party’s constituencies rather than protect the postal service’s interests.

      I can see the need for that kind of oversight when the USPS is a true monopoly, but that’s not really the case any longer. Yes, it has a monopoly on delivering to post boxes, but that’s no longer a very valuable monopoly since it’s so easy for UPS and Fedex to deliver directly (and, well, there’s the whole issue of email too).

      Indeed, the whole pension issue is an excellent example of how this politically-mandated inflexibility undermines the USPS’ ability to successfully operate in a modern economy. When the pension mandates were passed into law, the USPS had just completed a year in which it handled the most pieces of mail in its history (207 billion), and had run a profit of at least $1 billion per year in all but one of the previous 15 years, several times running a profit approaching $5 billion. While first class mail was declining, junk mail was still increasing. So why not require the post office to over-fund its pension plan while loosening some of its other restrictions (it’s worth mentioning that the bill passed both houses on a voice vote, by the way)? But that volume declined swiftly and dramatically, even as there’s no political interest in undoing the pension funding requirement or otherwise freeing the USPS up more.

      I strongly suspect these problems of inflexibility would be even worse if it were to get back into the financial services sector, where market conditions are more fluid, and there is a lot more competition, etc.

      Report

  9. Stepping back, I’d need someone more familiar with the banking system to tell me why this wouldn’t work, but it seems to be a possibility for getting the USPS into the banking business *and* the private banking market could easily provide the expertise to operationalize it.

    We already massively subsidize our financial system through the Fed window and our capitalization requirements. All you would have to do is make those two things more stringent except for whoever partnered with the USPS to be the postal banking carrier and BAM you’d have financial companies falling all over themselves to partner with the USPS to get back that which they ought not to have but just lost.

    I don’t recommend this as a strategy, necessarily. It comes with a lot of potential disaster coupled to it, but we already have a lot of that disaster coupled to the financial system so that’s not really introducing a new risk, it’s just failing to mitigate the one we currently don’t anyway.

    Of course, your own opinions about the fed window and the capitalization requirements may make this a more or less acceptable strategy, but the idea that we don’t already hold the financial system by the balls is weird.

    Of course, there are massive political hurdles to jump over to get that working, and given the history of the political system and the financial system working together I don’t think the approach is particularly one I’d like to try and undertake, myself.

    Report

    • Stepping back, I’d need someone more familiar with the banking system to tell me why this wouldn’t work, but it seems to be a possibility for getting the USPS into the banking business *and* the private banking market could easily provide the expertise to operationalize it.

      I’m somewhat familiar with how banking works, but more importantly, I know how partnerships work. That’s more important here. I’ll explain why.

      In my business, we raise equity capital for developers. Developers have the operational expertise and the deal pipeline but not the amount of capital it needs to execute all of the projects it wants to undertake. Capital sources would rather joint venture with developers in order to invest in quality product because the yields on development deals are better than they yields they would get on stablized assets if they acquire them in the market.

      As you can see here, there are synergies. The developer has the operational expertise and the pipeline. The financial partner has the capital and can get deals at effectively “wholesale” pricing without competing in the market.

      The problem I see with a USPS/private bank partnership is that it’s the bank that has both the capital and the expertise. The USPS brings nothing unique to the partnership. While I’ve heard arguments that the USPS has an infrastructure, the reality is that if a bank really wanted to enter into an underserved market, it could do so quickly and be able to find suitable office/commercial space within a short period of time (like other retailers, banks are in effect real estate companies because they’ll know the best locations).

      Not only does the USPS not bring anything tangible to the table, but because the USPS will want to operate this venture in the public interest, it’s going to demand certain levels of control. In effect, you’re going to have a position where the super majority partner (the bank) exercises very little effective control as to how the business is conducted. In my world, that’s a non-starter.

      Operating agreements/partnership agreements are messy enough for smaller deals. Getting the Post Office and, to use an example, JPMorgan Chase, to come to terms on a heavily negotiated agreement would take forever and a day.

      If we’re only talking about the banks providing operational expertise, what’s in it for the banks to do this? You said:

      We already massively subsidize our financial system through the Fed window and our capitalization requirements. All you would have to do is make those two things more stringent except for whoever partnered with the USPS to be the postal banking carrier and BAM you’d have financial companies falling all over themselves to partner with the USPS to get back that which they ought not to have but just lost.

      Setting aside the fact that Wall Street will strangle this idea in the cradle, assuming that it had legs, I think what we’d end up seeing is banks finding a way to provide those services themselves, kind of like a Community Reinvestment Act for those underserved by banks (however that would work).

      Report

      • Setting aside the fact that Wall Street will strangle this idea in the cradle

        Admittedly, that’s a **huge** set aside.

        I think what we’d end up seeing is banks finding a way to provide those services themselves, kind of like a Community Reinvestment Act for those underserved by banks (however that would work).

        I could see that as a win, myself.

        Report

      • I could see that as a win, myself.

        Seeing as my views on the Community Reinvestment are relatively neutral leaning slightly toward positive (in other words, I understand the purpose of it), I would probably be on board with the idea.

        Report

    • I do not really see anyone who is saying that this would not work. My point, at least, is that it is not the unguarded layup that some people want to make it out to be. There are reasons why most retail banks are not out actively looking for low-income customers and why the financial services companies that do cater to that demographic charges very high rates and fees. These reasons don’t magically go away because the government gets involved.

      We already massively subsidize our financial system through the Fed window and our capitalization requirements.

      This is an odd way to look at what the Fed does. It is not necessarily wrong, but it is odd. The purpose of the Fed window is to help maintain liquidity in the banking system, not really to subsidize banks. Since the financial crisis, the window has operated on what you could call concessionary terms, but traditionally that wasn’t really the case. Also the rate that the Fed charges for borrowing money is generally higher than the rate that banks charge each other on the overnight market.

      The point is that the Fed is supposed to be the lender of last resort.

      Report

      • The purpose of the Fed window is to help maintain liquidity in the banking system, not really to subsidize banks

        Pretty much if you loan money to an institution at or below 1% and you let them take the money that they have and count it 1,000 times for what they can lend out, I don’t see how you can call that anything but an effective subsidy.

        Not all subsidies are bad, mind you.

        The point is that the Fed is supposed to be the lender of last resort.

        Funny how it works out that the Fed is a lender of no resort to just about everybody who’s a normal citizen, and a lender certainly-not-of-last resort to a limited subset of organizations.

        Report

      • Oh, granted, I don’t expect the government to do everything, Kolohe.

        But as a “lender of last resort”, the Fed is certainly not so much that today, now is it?

        Report

  10. Does anybody else but me think that the $8.95 monthly fee is a ripoff? My current savings account charges a $2 fee which is waived as long as there is $500 in the account. That means even students can start an account. This is important as part of good money management is being comfortable in using a variety of banking services.

    Report

      • This seems odd as clearly banks can operate at a $2 fee. You would expect banks to compete at least in part by charging lower fees. That’s what they do in Singapore. Unless general savings rate also matters? Are Singaporean banks able to survive with lower fees because we have a higher savings rate even among lower income groups?

        Report

      • Beats me. My guess is that it’s partly what you describe (higher savings rates), what the market will bear, and costs imposed by the regulatory environment. In the US, we also have credit unions, which supposedly have smaller fees. I don’t know if that’s true or not, but if it is, maybe that somehow enters the mix, although one would think it would drive down fees.

        There also might be a cost-of-living difference. Perhaps in Singapore, 2$ is dearer than 2$ is in the US. You’d have a better grasp of that than I would.

        Report

  11. So… after following this thread from the start and then looking more closely at Green Dot and Wal-mart’s announcement I offer a few thoughts:

    1. Green Dot Bank is only sort of a “bank” as we all understand the term. All they do — and I mean ALL– is deal in pre-paid and re-loadable Visa and MasterCard cards. That card comprises the entirety of your account and your relationship with the institution.

    2. That said, the deal — at least as presented — is fairly reasonable and straightforward for what it is. You buy a preloaded, anonymous, card at a retailer and then you can upgrade that to a card with your name on it that they’ll send you in a few days. Alternatively you can bypass the retailer and order it directly on the Web. You just use it like any debit or ATM card and you can reload (deposit funds) via direct deposit or manually at the same retailers that sell them ($4.95 service charge). It’s not clear how the latter option would work out for depositing that paper Christmas check from Grandma. Finally, there’s no monthly service fee if you either deposit at least $1000 or make at least 30 purchases/ATM withdrawals. Otherwise there is a $6.95 service charge.

    3. The deal with Wal-mart doesn’t appear to be substantially different. It’s just co-branded and has a slightly higher monthly service fee but a lower threshold for avoiding the fee. Frankly, I’m underwhelmed at this point. In the first place they already sell the card so apparently all they’ve done is strike a deal to alter the fee structure somewhat and then make a lot of noise about it. Honestly, this is “Wal-mart getting into banking” only very slightly more than CVS, Rite Aid, Radio Shack, AT&T, Meijer, or Mobile Direct are into banking by dint of selling these things.

    4. The much-ballyhooed claim of “No Overdraft or NSF fees!” while technically correct doesn’t signal any kind of generous or forgiving attitude. It means you can’t write checks. No checks means no float. No float means no overdrafts. No overdrafts, no fees. It’s not bad necessarily but it’s not as impressive as it sounds, and if you really need to use paper checks for some reason you’re just SOL.

    5. Green Dot has a pretty crappy rating from consumer rating outfits like Yelp and Consumer Reports. Apparently they have a record of complaints about people loading money on the card and then not being able to spend it. Given that basic process is the entirety of their business model it’s a pretty serious indictment. Also their customer service sucks.

    6. Given all the above — what passes for “banking” in Wally-World and what that actually entails — and the similarity to what “Postal Banking” would amount to, it seems to me the critics of the USPS perhaps doth protest too much. I find it hard to believe that they couldn’t sell prepaid cards and reload them as competently as Radio fishing Shack.

    Your ( ) objections about having to round up eleventy-kajillion dollars of startup capital and lacking institutional wherewithal suggests that you’re assuming that they would be trying to recreate Bank of America from scratch. I haven’t read the Postal IG’s report but I can’t believe they’re suggesting anything like comprehensive loan products and all the rest.

    Report

      • Well to be fair, paper checks are very nearly obsolete anyway and operationally there really isn’t a lot of difference between this and a regular checking account aside from the “no checks” part. Other than that the main downside to me looks like an inability to have a joint account with two cards accessing the same money. They also don’t really have savings accounts although I saw something about putting some of the money in a “vault” which just appears to be making it look like you have less money on the thing than you really do until you tell them you want to “withdraw” some of it. And there’s absolutely nothing like loans, not even credit cards, so it only barely qualifies as a bank IMO.

        What bothers me about the whole thing is the way it’s being oversold as something really new and innovative when — apart from the altered, arguably improved, fee structure — it’s not even new for Wal-mart. They’ve been selling these cards for some time already but now, based on nothing but this minor tweak, we’re talking about Wal-mart “getting into banking.”

        I’m calling bullshit.

        Report

      • One thing is that Walmart cashes checks, and with Green Dots at Walmarts, that means you can take a check, cash it, then deposit it, all at a single location. Which makes it more convenient, I think, than Green Dot usually is (by my understanding – never used Green Dot).

        “No checks means no float” is actually not really the case. The banks got it a lot of heat because they would let you overdraft on your card and then charge you exorbitant fees for doing so. The CARD Act cut down on this, but personally I think it’s good that Green Dot avoids this entirely. I don’t think it was really paper checks that were getting people in trouble.

        Report

      • “One thing is that Walmart cashes checks, and with Green Dots at Walmarts, that means you can take a check, cash it, then deposit it, all at a single location.”

        It’s my experience that these days most larger grocery stores (and some Target/Walmart retailers) already have a staffed name-brand bank branch near the front of the store. (like many of them have a Starbucks kiosk also).

        Of course, the differences in the new proposal are to try to expand the customer base and to give Walmart a piece of the action (vice just (probably) rent), but the convenience aspect seems to already exist in large part.

        Report

      • How do people use these cards to pay rent? I suppose one answer is to purchase a money order, but I’ll add something here: It’s not always easy to put a stop on a money order if it goes missing. Money orders aren’t like checks in that regard.

        Another answer would be to pay cash. That’s even harder to put a stop on if it goes missing.

        Report

    • I haven’t read the Postal IG’s report but I can’t believe they’re suggesting anything like comprehensive loan products and all the rest.

      Of course they wouldn’t suggest it because that competes with the big banks. However, payday loans were suggested in the report. You don’t need to recreate Bank of America from scratch but you do need capital of both the financial and intellectual variety. The Post Office lacks it and the private sector won’t be forthcoming with it. It boils down to one question – why partner with the Post Office at all?

      Report

      • : It boils down to one question – why partner with the Post Office at all?

        A few billion in deposits? A huge marketing database complete with a big data, comprehensive record of everything they’re spending money on? Why is Green Dot partnering with Wal-mart, a notorious PITA to be a supplier for?

        Report

      • Road Scholar,

        The billions in deposits are what potential customers have to offer. It doesn’t tell us what the USPS has to offer. That is, if the billions are a real draw, why do the banks need the USPS to go after those billions, instead of doing it directly?

        The GreenDot/Wal Mart example doesn’t hold. Green Dot knows that millions of people in its target group shop at Wal Mart regularly. Do they really go to the Post Office regularly? And as Dave, I think, noted, banks are in the real estate business; they have an incentive to know the good locations. Does the USPS have that same incentive?

        What does the USPS offer, specifically, that helps banks get to those billions more efficiently than they could get to those billions operating on their own?

        Report

      • Why is Green Dot partnering with Wal-mart, a notorious PITA to be a supplier for?

        Because Wal-Mart has something Green Dot wants and vice versa.

        I don’t think this dynamic applies for a potential partnership between the Post Office and a financial institution. There’s nothing the Post Office has that any potential banking partner either doesn’t already have itself (data) or can’t get within a short period of time (real estate – branch locations).

        Report

      • There’s nothing the Post Office has that any potential banking partner either doesn’t already have itself (data) or can’t get within a short period of time (real estate – branch locations).

        Well there is value in the USPS brand. Unfortunately, the various brand value lists I’ve looked at tend not to include publicly owned entities. But what I can point to is the valuations that these analysts put on brands of substantial market size in the same sector. Based on that, admittedly back of the envelope style analysis, it isn’t too much of a stretch to say the post office’s brand has a value in the billions of dollars range. That is definitely the USPS bringing something to the table supposing they wanted a partnership (though personally, I’m not convinced by the USPS would need a partner line).

        Here are valuations of logistics/transport brands by Forbes’ “The World’s Most Valuable Brands”, Brandfinance’s Brandirectory.com, and WPP’s Brandz:

        Company, Forbes value, Brandirectory value, Brandz value. All in billions of dollars.
        UPS, $10, $19, $47
        FedEx, $5.8, $13, $17
        DHL, not top 100 for Forbes, $11, $13

        You’re rarely going to encounter someone in the US saying “The Post Office, oh, I’ve never heard of them. What do they do?” Entering the financial services space may not bring 100% of that value along, but the brand itself is still a substantial asset.

        (Also, I don’t see how you’re setting aside real estate/branch network as an asset, but again, trying here to reply to this narrower proposition you’ve made.)

        Sources (dots needed before the “com”):
        forbes com/powerful-brands/list/
        brandirectory com/league_tables/table/global-500-2014
        brandz100 com/#/tabbed/global-100/149?tab_id=150&tab_url=%2Ftop-table%2Ftop-100-48673d91-a201-4477-aefd-86db2db2b656%2F150

        Report

      • : And as Dave, I think, noted, banks are in the real estate business; they have an incentive to know the good locations. Does the USPS have that same incentive?

        What does the USPS offer, specifically, that helps banks get to those billions more efficiently than they could get to those billions operating on their own?

        First, “good location” from a bank’s perspective doesn’t normally coincide with “where poor folks hang out.” USPS locations on the other hand are more randomly distributed.

        I guess my best answer would be that the USPS offers the ability to enter thousands of geographically dispersed markets nationwide without buying a square inch of land, stacking two bricks atop one another, or hiring a single teller. It doesn’t actually matter that much if the proposition is low yield since it’s almost cost-free.

        Report

      • : Because Wal-Mart has something Green Dot wants and vice versa.

        Weaselly answer, Dave. Let’s be specific. Green Dot is already selling their products in Wal-Mart. As well as CVS, Rite Aid, Radio Shack, Meijer, etc. Whatever Wal-Mart has to offer Green Dot they’re already getting. And I can’t see much of anything, apart from a temporary marketing push, that’s in Green Dot’s favor in this latest deal.

        On the other hand, right now… today… I’m at home for my weekend. If I wanted to buy a Green Dot card I couldn’t do it in a retail location*. The nearest Wal-Mart is ~60 miles away. But I have a post office downtown, which in this town is easy walking/biking distance.

        Let’s at least compare apples to apples here, shall we? Look at what Green Dot Bank actually does and what the much-vaunted Bank of Wal-Mart/Green Dot is actually going to be and explain to me again how incredibly complicated it would be for the USPS to do exactly the same thing with a similar partner. Keep in mind that the USPS already handles money services and is therefore plugged into the overall banking system vis-a-vis postal money orders.

        Report

      • “Random” is not actually a good thing here. ;)

        And it was a poor choice of words on my part. Ubiquity is more the concept I’m after. The USPS has a location in basically every zip code in the country. And “random” is better than “avoiding you like the plague.”

        But really, I regret stressing the geographic angle here as much as it seems like I’m doing. The main point in the USPS’s favor in this way is being reasonably accessible to practically everyone in a way that even Wal-Mart can’t match.

        The real issue with the un/under-banked isn’t physical accessibility. This isn’t an issue like “food deserts” where grocery stores aren’t located in poor neighborhoods. The un-banked can, in general, physically walk into a bank… and then be denied a checking account for [reasons].

        Remember, James, my initial post on this subject was to agree with your sentiment of “have both and let the market decide.” I have no heartburn with the Wal-Mart/Green Dot thing. I think it’s a bit over-blown to call the arrangement “banking” given the limited range of banking services actually being offered, But it’s certainly not a BAD thing and it’s a damn sight better than what traditional banks offer the poor.

        And if you constrain your concept of Postal Banking to be the equivalent of Wal-Mart/Green Dot then you’re talking about something about as complicated — and not terribly dissimilar to — selling stamps and servicing postage meters.

        Report

      • Weaselly answer, Dave. Let’s be specific.

        That’s amusing. I thought I was one of the few people arguing from specifics. I don’t know why you find my comment so weaselly given that the first rule of any good joint venture/partnership is that you find partners to create synergy. Each having what the other wants is the best kind of synergy you can ask for. My clients have a development pipeline. They need capital. I know capital sources looking to partner with developers. A meet B. Everyone is happy.

        Green Dot is already selling their products in Wal-Mart. As well as CVS, Rite Aid, Radio Shack, Meijer, etc. Whatever Wal-Mart has to offer Green Dot they’re already getting. And I can’t see much of anything, apart from a temporary marketing push, that’s in Green Dot’s favor in this latest deal.

        I see quite a bit. When you get access to a platform, you can expand your business offerings through it. That’s what Green Dot is doing and both companies will benefit.

        On the other hand, right now… today… I’m at home for my weekend. If I wanted to buy a Green Dot card I couldn’t do it in a retail location*. The nearest Wal-Mart is ~60 miles away. But I have a post office downtown, which in this town is easy walking/biking distance.

        If you are like the large number of Wal-Mart shoppers that have to travel great distances to come to their stores to buy the cheapest products around, Green Dot and Wal-Mart know that they don’t have to go to you. You’ll go to them, even going so far as making a 40 to 60 mile trek.

        Let’s at least compare apples to apples here, shall we? Look at what Green Dot Bank actually does and what the much-vaunted Bank of Wal-Mart/Green Dot is actually going to be and explain to me again how incredibly complicated it would be for the USPS to do exactly the same thing with a similar partner.

        You’re looking at the wrong apples. The comparison is why someone would want to partner with Wal-Mart (or another company) vs. partnering with the Post Office. That’s an easy explanation. Start here::

        https://www.uspsoig.gov/sites/default/files/document-library-files/2013/rarc-wp-13-011.pdf

        Read Pages 5 and 6 starting with “Lessons Learned…” and tell me what private sector company would want to enter into a partnership with the USPS given these issues, especially when there are more viable alternatives for them (i.e. Target, Costco, Sam’s, etc. etc.).

        You can’t offer a product through a partnership if no one wants to partner with you.

        Keep in mind that the USPS already handles money services and is therefore plugged into the overall banking system vis-a-vis postal money orders.

        Those are already approved products. I think it would have to get approval to offering anything else. If that’s the case, forget it. By the time the USPS approves it, they’ll be the last player in the game. Those folks over there move slower than molasses in January.

        Report

      • I’m just doubful about the uniquity argument. And from what I understand, the geographic argument is very much the argument others are making. Not that you therefore have to, obviously. I’m just noting the distinction.

        Report

      • You’re rarely going to encounter someone in the US saying “The Post Office, oh, I’ve never heard of them. What do they do?” Entering the financial services space may not bring 100% of that value along, but the brand itself is still a substantial asset.

        You’re rarely going to encounter an intelligent person in the US saying “The Post Office, what a great organization!!!”

        Given its piss poor reputation and its current troubles as well as the fact there is perception that it NEEDS a partner (see the IG report), no one is going to attribute much value to the USPS brand until the brand can stabilize itself.

        I don’t see how you’re setting aside real estate/branch network as an asset…

        Two reasons:

        1. The fact that there are physical locations is not enough to conclude whether or not those locations are suitable for use in their current form. Hopefully, the organization is in the midst of a strategic plan with respect to its real estate. I have no idea if it actually is though.

        2. Because banks are in some ways real estate operating companies, and even if they don’t have locations, they can open them pretty quickly.

        Report

      • Well there is value in the USPS brand.

        There is value in the brand within its core business. I don’t know if I would put the same value to the brand as you did seeing as some of the more valuable brands out there are direct competitors to the Post Office and have gotten successful exploiting its weaknesses.

        That is definitely the USPS bringing something to the table supposing they wanted a partnership…

        They can try to bring it to the table but because the potential partners don’t need the Post Office as a partner, the brand means very little. Any potential partner can do this just as effective on their own without having to deal with all of the issues that will be associated with a partnership with the USPS, especially control rights.

        Report

      • I’m doing a certificate program in Software Project Management right now & it covers the business case for a given project. One of the things we just talked about was branding & how easily a strong brand can damage itself by attempting something outside it’s core competencies & failing.

        In short, if the USPS tries it’s hand at banking & does not pull it off well, it can severely damage the brand as a whole (if you can’t trust them to handle your money properly, should we trust them to handle packages, or even mail, which has your bill payment in it?).

        Report

      • MRS,
        if they haven’t covered firing 10% of your customers per year, you aren’t getting the skinny on how to artificially create barriers to entry in your field.
        (Yes, I know someone who runs hardware. Not on vodka — that was someone else).

        Report

      • A thought on brand value.

        Google has brand value. It’s also the leading innovator right now in autonomous automobiles. Yet it’s just about given up on finding an automotive company to partner with it to build autonomous cars, even as the automakers are successively adding elements of autonomy to their cars (GPS, automatic braking, self-parking ability).

        If brand value itself matters that much, then some automaker ought to have partnered with Google by now. Unlike the USPS, it’s both got brand value and it’s got some technological advantage, and the Google car may very well have higher name recognition than post office banking. But it seems they don’t actually need Google, brand value or no.

        Report

      • “You’re rarely going to encounter an intelligent person in the US saying “The Post Office, what a great organization!!!””
        For the record, you will never hear an intelligent person say that about a cable company, insurance company, or any large bank.

        Its not snark, or a nit to pick. The Post Office’s reputation is undeserved folklore, like the government mule or urban legends about Pentagon’s WastenFraud division.

        We’ve already covered the reasons why it loses money, and already pointed out how they are perfectly competitive with such brilliant organizations like UPS or Fed Ex.

        Using the argument of “B-but the USPS is an inefficient gummint byurocracy” may fly at RedState, but among thinking people, it is weak tea.

        Report

      • but among thinking people, it is weak tea.

        We’re all eager, of course, to define ourselves as “the thinking people.” Those who disagree with us obviously aren’t thinking.

        But I’m not sure that simplistically distorting what another person said so you can bash that instead of his actual argument–as you have done here–distinguishes a person as one of the thinking set.

        I have a student in my constitutional crisis class. Last week he got mad at a discussion of marriage rights and kept repeating “marriage isn’t a right, it’s a privilege. That was his entire argument, repeated endlessly in an ever quieter and sulkier voice. Today he was arguing in favor of a qualifications test for voting, “because some people don’t know enough to vote.”

        I’m not persuaded he’s qualified to make that judgement.

        Likewise, I’m not persuaded you’re qualified to make a judgement about who’s thinking about American government and who’s not. The subject is, if I may shamelessly plug myself, rather my professional specialty, and to date you have failed to convince me you have anything more than a boilerplate understanding of it imbued with a hefty dose of wish fulfillment.

        Mad Rocket Scientist is an engineer, which doesn’t make him right, but does indicate he knows something about thinking.

        Dave, I think, has more than proved himself in the thinking line.

        You, I think, have no business suggesting other people aren’t part of the thinking set.

        Report

      • James,
        well, since this is your specialty… what articles you got on the USPS? ;-P
        (no, you needn’t feel you have to answer… but I would read something (at least skim) if you posted.)

        Report

      • For the record, you will never hear an intelligent person say that about a cable company, insurance company, or any large bank.

        But you will hear it about Fed Ex and UPS, two major competitors to the USPS.

        As far as the banks are concerned, I’m afraid your view of the banks is too narrow. There are a number of large banks ($1 billion in assets and up) that aren’t close to the size of the mega banks and many of those have solid reputations for appealing to local communities. Two ways I’ve historically seen this: 1) small business banking relationships; 2) mortgages and consumer loan products that are more competitive than the what the nationals provide.

        I get it. It’s a lot easier to impugn the entire banking sector from top to bottom based on the actions of the mega banks and Wall Street, whose actions played a substantial role in what happened in 2008 as well as the inability/unwillingness to modify mortgages during the post-crisis years. It’s understandable. However, since that requires a macro view of the banking industry and next to no knowledge of the individual players, I can’t see how you can make the statement you made since you probably know jack shit about the better banks out there. Chances are better than average that I’ve dealt with more bankers than you have.

        Its not snark, or a nit to pick. The Post Office’s reputation is undeserved folklore, like the government mule or urban legends about Pentagon’s WastenFraud division…

        You and must occupy the same universe.

        We’ve already covered the reasons why it loses money, and already pointed out how they are perfectly competitive with such brilliant organizations like UPS or Fed Ex.

        Yet, it’s bad reputation is undeserved folklore? A company that can’t manage its way out of a paper bag is supposed to have a good reputation? Come on. What am I missing here?

        Side note – I never mentioned that UPS and FedEx were “brilliant”. It doesn’t take brilliance to kick the USPS’s ass in the marketplace, which both of those companies can do.

        Using the argument of “B-but the USPS is an inefficient gummint byurocracy” may fly at RedState, but among thinking people, it is weak tea.

        Nothing good can come out of me responding to this part of your comment.

        Report

      • Dave,
        Tried getting good service in Nepal or Liberia lately? There are occasionally reasons to prefer large banks with an organizational presence (or commitment to establishing one should you need it), worldwide.

        Report

      • Kim,

        There was a spate of stuff written about a century ago (including a curious piece on the administrative problems of the Confederate post office), but little specifically written since in the academic literature. But I’ve cited various writings on bureaucracy that you can certain look at.

        My overall point is, anyone who thinks bureaucracies are plug ‘n play, who doesn’t think there are some particular pathologies to public agencies,* has no business telling other people they’re not part of the thinking set on this issue. There’s a whole field out there called “Public Administration,” as well as a subarea of the Public Policy field focused on “implementation problems.”

        It’s no shame not to know them, but if one doesn’t, then one doesn’t know what one doesn’t know, and should be hesitant to accuse others of being thoughtless.

        Report

      • Tried getting good service in Nepal or Liberia lately? There are occasionally reasons to prefer large banks with an organizational presence (or commitment to establishing one should you need it), worldwide.

        Have you?

        Report

      • Tried getting good service in Nepal or Liberia lately? There are occasionally reasons to prefer large banks with an organizational presence (or commitment to establishing one should you need it), worldwide.

        My non-snarky answer –

        I agree with this. The large corporations that may be, for example, US-based, have strong US-based banking relationships yet operate worldwide would want their existing banking relationships to help them navigate through the issues pertaining to investing globally. Having presences in those markets may be much more beneficial than reaching out to their local banks.

        I get that.

        Report


      • Can’t manage their way out of a paper bag? Support, please.

        Without any supporting evidence, this is just a high toned version of the “B-but gummint” argument. (Side note to James- when someone actually makes the argument, it isn’t unfair to point that out.)

        Show us how the private carriers could provide universal coverage to every address in America, for the same price, under the same criteria imposed on USPS. I’m not convinced they can.

        If it is the criteria that causes inefficiency, lets talk about that- is anyone arguing that mail delivery should be eliminated for certain inefficient addresses? Or raise the cost of delivery? Or have variable delivery rates? Etc. If so, I’m fine with all that.

        But to simply wave a hand at USPS as somehow being intrinsically inefficient, because it is not market driven is silly stuff. And yeah, its the province of economic fundamentalism. I didn’t mention Nick Gillespie, since that would be unfair and uncivil.

        Report

      • simply wave a hand at USPS as somehow being intrinsically inefficient, because it is not market driven is silly stuff.

        If one is going to reject a concept as “silly,” it would seem one must have a fairly thorough understanding of it.

        Would you care to demonstrate the basis for your rejection by outlining the theory of the inherent inefficiency of bureaucracy and explaining where it errs?

        Report

      • Can’t manage their way out of a paper bag? Support, please.

        After 200 plus comments, I’m sure you’ll find what you need in here. Take a look. If not, there’s Google. Feel free to think I’m making unsubstantiated claims. At this point, I don’t care.

        It’s pretty simple actually – how many years has the Post Office experienced problems? What have they done to address them? Has it worked or shown any signs of working?

        Without any supporting evidence, this is just a high toned version of the “B-but gummint” argument. (Side note to James- when someone actually makes the argument, it isn’t unfair to point that out.)

        When I said nothing good would come out of responding to this, I meant it.

        Show us how the private carriers could provide universal coverage to every address in America, for the same price, under the same criteria imposed on USPS.

        So your argument is that the Post Office is distressed but other private sector carriers would be in the same position if faced with the same constraints?

        You want me to prove the argument you’re trying to make? No. That one’s on you.

        I’m not convinced they can.

        Says the person that asked me to cite sources but has none of his own to support this claim. Anyway, it’s irrelevant.

        If it is the criteria that causes inefficiency, lets talk about that- is anyone arguing that mail delivery should be eliminated for certain inefficient addresses? Or raise the cost of delivery? Or have variable delivery rates? Etc. If so, I’m fine with all that.

        Great. You’re fine with it. However, I don’t think we’re having a “fix the Post Office conversation” anytime soon. At least it’s not one I’m going to have, at least for now.

        But to simply wave a hand at USPS as somehow being intrinsically inefficient

        Didn’t I mention why the Post Office is struggling? In at least…oh…ten places or so?

        because it is not market driven is silly stuff. And yeah, its the province of economic fundamentalism.

        Ack. It’s the gratuitous anti-libertarian cheap shot coming from the OT comments section’s most vocal proponent of the art of folk economics. I guess you showed me.

        I didn’t mention Nick Gillespie, since that would be unfair and uncivil.

        To be fair and civil, I’ll respectfully agree to disagree with you. We’re done here, right?

        Report


      • Certainly-
        Government bureaucracies always appear inefficient when compared to private counterparts, because generally their missions are different.
        Public agencies generally are intended to offer universal access, no questions asked, on a fixed price, and to offer complete geographical coverage.
        Which, not surprisingly, is wildly inefficient.

        Its not even intended to be.

        Despite all the scorn heaped on USPS, I never actually hear anyone coherently describe how a private entity could do the same job both better and cheaper. If someone wanted in good faith, to reform the USPS to make money, they would have to acknowledge the structural criteria placed upon it, and either challenge or endorse them.

        The attack on USPS is usually a proxy war on government itself, which is why we are having this argument in the first place- the idea that USPS could also provide banking services is waved away with “NA GA Happen” as if a quasi- government entity is axiomatically incompetent. Then the conversation turns to how such an entity could make money for investors, as if that is an important criteria for low income banking (it isn’t).

        Look, if you guys want to assert a set of values in which universal access and provisions of services to those who can’t afford them isn’t a criteria, by all means make that argument.

        Lets just not pretend like there is some magical reason why the Pentagon pays more for hammers than Ace Hardware does or why it takes USPS more to deliver a piece of 4th class junk mail to Rural America than FedEx does for a parcel to Manhattan.

        Report

      • Certainly-
        Government bureaucracies always appear inefficient when compared to private counterparts, because generally their missions are different.
        Public agencies generally are intended to offer universal access, no questions asked, on a fixed price, and to offer complete geographical coverage.

        Can you expand on that “fixed price” element? That is, why is that significant?

        Report


      • On one of the rare points of agreement between us, I don’t think a fixed price for mail is important or even desirable. I would be happy to see mail rates set at the true cost.
        However, the American public and Congress disagrees.

        Report

      • ,

        That’s not actually answering the question.

        Why is the fixed price significant?

        Or more on point, why does government usually have a fixed price, and what is the significance of that for efficiency?

        Report


  12. Responding down here.

    I should have said since the First Bank of the United States – so since really near the founding of the nation.

    only the government will overcharge some customers to subsidize others, but that’s exactly why the government shouldn’t be doing it. There’s no market failure here. USPS cross-subsidization isn’t correcting extenalities. Instead it’s creating them.

    So you see a bug, I see a feature. This is also the issue that arises in the brief discussion of policy banks that and mention upthread – they focus on the downside risk, I see the upside potential. Regarding policy banks, James brings up the recent NYT piece on Bank Rossiya and its close ties to Putin and Putin cronies. Obviously that is not the image of a postal bank I’m advocating. And the downside risk of capture by cronies can be mitigated (term limits for board members, appointments spanning more than a presidency, etc.), and there are upsides.

    You, Brandon, go on to present a rather narrow vision of what deserves cross-subsidy; public goods are one area, but cross-subsidy/redistribution can be a valuable tool in other areas as well. Some private goods deserve state subsidy (I’m sure my list is quite long compared to yours). To me, enabling people in rural America to remain connected at reasonable cost is worth the cross-subsidies.

    I’d note also, we have a specific provision permitting Congress to establish post offices in the Constitution of the United States – that postal clause doesn’t also say: “and operate at a profit”. They thought post offices were an important enough government function at that time, one part of knitting the nation together; I think it remains so today. I’d say for social cohesion reasons (not something that may move the needle much for you or the more libertarian-minded around these parts, but that is one of my reasons), it does make sense for cross subsidy to occur in this way.

    You understand that government isn’t actually magic, right? Nor is it some respository of great genius and competence unavailable to private sector firms.

    Returning to the upsides of policy banks, they are freed from some of the constraints highlights as concerns, namely risk adjusted returns and what the capital markets think. Policy banks can focus on things like:

    1. economic inclusion: banking for the unbanked and underbanked, or student loans at low rates (for example, one of the things the state-owned Bank of North Dakota supports),
    2. economic development: targeting historically neglected or underserved communities or geographic areas
    3. green development and moving towards sustainable relationship with the environment

    Risk adjusted returns and what capital markets think are important in their own way and in their own particular sphere. I’m not knocking those entirely. They miss a lot though. There’s also the sphere of the commonweal, the civic, the public good not in the economist’s sense but in the broader sense. The state has far more room to think beyond the confines of return on investment and capital markets. The state can set certain goals and deploy its substantial resources to attaining them.

    That’s part of the reason why the “find private partners” thing and the bureaucratic pathologies rejoinders so unconvincing. This state sent people to the moon and got them back safely, under a decade after making the commitment. I’m sure when outlined as a goal there were plenty of people around to say, that’s a non-starter because reasons. Depending on the specific lines of business you’re counting, 8 to 116 states engage in some form of postal banking.*

    This reply is already plenty long, but there are weeds to get into regarding the 8 figure being real estate lines of business, which I’m not proposing, and the 116 figure being lines of business the USPS could do like “cash-merchant for transactional financial services”. The long and short of it is, this is completely doable.

    * “Global Panorama on Postal Financial Inclusion: Business Models and Key Issues”, Universal Postal Union, February 2013, see the table on page 83. The explanation as to business models is on pages 19 and 20. PDF here, http://www.uniglobalunion.org/sites/default/files/pictures/post/globalpanoramafinancial_inclusion_-upu_-en.pdf

    Report

    • Creon,
      A good reply, and I don’t mean this as an all-encompassing rebuttal, but a couple of notes.

      1. Regarding policy banks, James brings up the recent NYT piece on Bank Rossiya and its close ties to Putin and Putin cronies. Obviously that is not the image of a postal bank I’m advocating.

      But we never do, do we? And yet sometimes those thing happen anyway. I have to trot out my trusty old policy rule again: “Don’t focus on your goal, focus on the incentives you’re creating.

      2. And the downside risk of capture by cronies can be mitigated (term limits for board members, appointments spanning more than a presidency, etc.),

      And here you are focusing on the incentives, which is good. And while I agree in general, it’s worth noting that–like the Fed itself–we are solving the problem we create by reducing democratic accountability. That’s not necessarily a bad thing, so it’s not necessarily an argument against a postal bank. But as a general rule, I think we want to keep in mind how much reduction in democratic accountability a democracy should countenance.

      Report

      • s a general rule, I think we want to keep in mind how much reduction in democratic accountability a democracy should countenance.

        I think we’ve discussed this a little bit before (maybe in the context of the US having a stronger public broadcaster or the US having better support for the arts?) and on the whole you are more alert to this as an active problem than I am. To me, if Congress writes the charter, sets out internal accountability mechanisms (audit, inspector general, etc.), and there’s regular testimony before Congress, that’s altogether a reasonable level of accountability.

        Congress, especially given its behavior in recent years, is pretty wise to set the remit of an institution and delegate some tasks to expert managers. Congress would retain the authorities to hold people in contempt, censure them, impeach the future PostBank director, or even if it so chooses, revoke the charter. With those powers, I’m not sure to what extent the reduction in democratic accountability is significant – especially given the kind of parameters of a postal bank set out: small dollar loans, fairly small savings accounts, bill payment services, check cashing, money transfer, etc.

        Report

    • I would add that the “we can put a man on the moon, so we can do X” argument does not work. Putting a man on the moon, while a very complex technological task, was still just a technological task. And if any agency has ever had a very clear sense, it was NASA in the 1960s.

      I think if we view a Postal Bank as merely a technological task, we’ve misinterpreted it. It is a far more political task, and you actually demonstrate why when you start emphasizing its potential as a policy bank. It could potentially succeed in that role, but the more different policy goals you give it, the more you inadvertently set it up for failure.

      Going to the moon is actually much easier.

      [Edited to add: If I sound like a continual naysayer, I should explain that years of study of government have led me to see my public intellectual role as explaining why government is not a candy machine, in which putting in a buck fifty and pushing D1 reliably produces a Snickers bar. Whether it’s the war on poverty or the war on drugs, government policy doesn’t work so simply, yet we are repeatedly assured by both sides that their preferred policies are quite simple to implement and good results assured. In his classic article “Up and Down with Ecology–the ‘Issue-Attention Cycle’,” economist Anthony Downs lists as the second stage “Alarmed Discovery and Euphoric Enthusiasm.” Here’s how he describes the enthusiasm.

      This alarmed discovery is invariably accompanied by
      euphoric enthusiasm about society’s ability to “solve this problem” … The combination of alarm and confidence results in part from the strong public pressure in America for political leaders to claim that every problem can be “solved.” This outlook is rooted in the great American tradition of optimistically viewing most obstacles to social progress as external to the structure of society itself. The implication is that every obstacle can be eliminated and every problem solved without any fundamental reordering of society itself, if only we devote sufficient effort to it. In older and perhaps wiser cultures, there is an underlying sense of irony or even pessimism which springs from a widespread and often confirmed belief that many problems cannot be “solved” at all in any complete sense.

      Of course some problems can be solved. The Clean Air Act, for example, has a great benefit-cost ratio (although the latest amendments are not guaranteed to do so). And of course it’s the naive optimists who drive policy forward instead of sticking grimly to the status quo. But it’s also important to have someone trying to keep that naive optimism in check, lest we move toward an ill-thought out and top-down reordering of society whose costs vastly outweigh its benefits.]

      Report

      • Lee,

        I’m sympathetic to James’ and other’s worry that plugging banking services into an established bureaucracy hinders implementation and the likelihood of success, but from where I’m sitting, I think that’s mostly the expression of an anti-gummint sentiment than anything else. If Walmart fails to achieve some (or any) of the goals we’d all like to see realized, then the failure can – and will! – be pinned on the impersonal, non-partisan, and equilibrium-establising force called “the market” rather than on, in the USPS case, the personal, partisan, and equilibrium-distorting force known as “gummint”. Somewhere in there is a reductio. And absurdum.

        I’m also sympathetic to Brandon’s point somewhere on this thread that some liberals will shut or shout down an imperfect solution that may actually improve the situation poor folk rather than let Walmart make mo’ money on the po’. He’s right, and it’s true, and that sucks too.

        Report

      • from where I’m sitting, I think that’s mostly the expression of an anti-gummint sentiment than anything else.

        Dude, don’t let your argument with Jaybird trickle over to this page just because Will shut down the comments over there.

        Report

      • Dude, don’t let your argument with Jaybird trickle over to this page just because Will shut down the comments over there.

        I would never do such a thing. What I said up there is a free standing expression of heresy.

        Report


      • Ok let’s jettison the sending men to the moon thing and go for a more comparative government and politics oriented answer. Other countries have figured out how to locate these two missions in their postal institutions: reliably delivering packages and promoting financial inclusion. There’s a Justice Breyer quote in a completely different context (foreign law and US Constitution interpretation) that I think applies here,

        […] who has a society that’s somewhat structured like ours. And really, it isn’t true that England is the moon, nor is India. I mean, there are human beings there just as there are here and there are differences and similarities.[…]

        So here you’re trying to get a picture how other people have dealt with it. And am I influenced by that? I am at least interested in reading it. And the fact that this has gone on all over the world and people have come to roughly similar conclusions, in my opinion[…] because I thought our people in this country are not that much different than people other places.

         

        I understand the bureaucratic pathologies point you and are making. My point is, look at all these other bureaucracies worldwide that’ve done this. That should give us hope that the obstacles aren’t insurmountable. Non-starter means in part, don’t even try, or not even worth advocating for. There are quite a few political ideas that could’ve easily been called non-starters at the time. I think people like Elizabeth Warren are right to put postal banking on the agenda. Otherwise we have inertia and the left settling for what is rather than imagining what could be.

        “fundamental reordering of society itself” – Yes! Let’s get more of that in our advocacy emanating from the left. Child trust funds, universal pre-k, paid sick leave, paid maternity and paternity leave… Clinton era triangulation (and to some extent Obama style conciliatory politics) can restrain some of the more bold, innovative ideas the left has to offer. I’d contend that public intellectuals need to have a dollop of that unrestrained imagining of possibilities (my particular preference is on the left, but I suppose the right gets to do that imagining too).

        (Also, I’d want to scrutinize how Anthony Downs is using the word solved, especially “many problems cannot be ‘solved’ at all in any complete sense”. Solving problems in a complete sense is quite a high bar. Trying to move from X million without health care, or Y million without access to mainstream financial services to X-1 or Y-1 million without, is altogether a more reasonable short/medium term goal. I’d say plenty of policymaking is about that kind of outlook, in addition to the longer term thinking I’d mentioned.)

        Last point of another long reply on my part, I’d argue there’s a reason people don’t run for and win office on the kind of pessimism platform Downs, at least a little, praises. People genuinely have problems in their lives and government can be an awesome tool in making those problems smaller, if not solving them. “Sorry, can’t help. That problem’s just to big, too difficult, too intractable”, is not a very satisfactory answer and I don’t think voters of any stripe should settle for it.

        Report

      • Two general comments (no time for more, I’m afraid).

        1.Re: Postal Bank. I don’t think anyone’s arguing that we couldn’t do it. We’re just sketpical about how well. Pointing to other countries that have such systems is not the same as proving they do it well.

        2. Re: Downs. Some people think it’s a coincidence that Americans’ dissatisfaction with their government has increased as it had tried to take on ever more problems. I’m skeptical it’s merely coincidental. Others think the dissatisfaction is just caused by anti-gummint right-wingers. I’m more inclined to see them as symptom rather than cause. E.g., the war on poverty has not been successful. The increase in social workers has not reducef social problems. Federal involvement in education has not generally improved education (not beyond integration), etc.

        Some problems are tractable through government means. Not all are, but we expect it to act anyway. Then we blame it or political opponents or a generalized “lack of will” for failure.

        Report

      • : E.g., the war on poverty has not been successful. The increase in social workers has not reducef social problems.

        “Solving” a problem entails correcting the root cause of a problem. In the case of poverty we’ve never actually attempted to do that. Instead we have enacted various redistribution mechanisms to alleviate the symptoms.

        The root cause of poverty has been known since the days of Smith and Ricardo. Personal incomes can be apportioned as the returns to Labor, Capital, and Land as Wages, Interest, and Rent. The overall proportions vary with the state of economic development of a society but in modern economies it breaks down roughly into thirds. (A pre-industrial economy, with little Capital formation will be closer to 2/3 Rent and 1/3 to Labor.)

        This wouldn’t necessarily be a problem if the population were similarly divided into thirds of Workers, Capitalists, and Landlords. It would rankle a bit to see the Landlord sitting around collecting rent while you, a Worker, worked your ass off for wages, but at least we wouldn’t see these stark disparities of incomes. But, in the real world, ownership of income generating, productive assets results in a positive feedback mechanism concentrating these assets, and the returns thereto, in the hands of a very small economic elite class while the vast majority divvy up that last third.

        Various thinkers have more or less correctly diagnosed this problem and prescribed correctives. Marx sought to eliminate the Capitalist class* entirely by investing the ownership of productive capital with the Workers. Henry George, following the lead of the French physiocrats, saw the root problem as Rent, with the Landlord being entirely parasitic and perversely first in line to collect his share. In his view, with the Landlord out of the picture the Capitalists and Laborers could work things out amicably. Pope Leo XIII and the Distributists went a slightly different direction, seeing the problem as being essentially a symptom of modern industrial capitalism writ large and harkening back to a time (which never really existed) of many small individual and family businesses. Bigness in all things (save Religion, natch, being adherents to Catholic Social Theory) were to be eschewed. The Unionists, following Marx and ignorant of the Rent issue, simply wanted a larger share from the Capitalists. Finally, you have the Money theorists, who make a sharp distinction between Financial and Tangible Capital and see the basic paradigm of money creation as the enabler of most mal-distribution.

        Frankly, I’m sympathetic to all these views to various degrees, but whatever the actual truth of the situation, it makes little sense to complain that New Deal and Great Society reforms haven’t “solved” poverty. All they were ever designed to do was apply a redistributive bandaid over the natural outcomes of laissez faire capitalism. It’s like complaining that the morphine drip hasn’t cured the bone cancer.

        * Marx, like modern economists of the neo-classical lineage, conflated Land and Capital and make little distinction between Rent and Interest as the Classic tradition understood them.

        Report

      • Road Scholar,

        I’m not complaining, I’m observing. And as I said above, people want problems solved without a fundamental re-ordering of society. That’s one of the general constraints on government, which it can only rarely overcome (and usually only as a result of crisis, and often, unfortunately, with regrettable results). In the U.S., we’ve only tried approaches that do not a fundamental restructuring. Many, not necessarily all, of the approaches you reference would require such a reordering.

        Report

    • “Not beyond integration” is doing a hell of a lot of work there, .

      But more broadly, our nation is more educated today that it has been at any time in its history. Plenty of that has to do with the involvement of the federal government. If people have negative feelings about the involvement of feds in education, then it’s as much about the narrative as it is about the reality. And keeping the government out of a spot where the potential exists do provide a needed service for a lot of people isn’t a way to fix the narrative.

      I might be convinced that postal banking is a bad idea for a lot of reasons, but “people don’t like government” isn’t one of them.

      Report

      • I might be convinced that postal banking is a bad idea for a lot of reasons, but “people don’t like government” isn’t one of them.

        Alan,

        That’s not how I interpret my argument, but let me come back around to that quote in the end.

        Re: Integration. I agree that’s very significant. But it provides a good case study, because integration has never been fully achieved. White flight and the growth of private schools were part of the response to integration. Here’s but one of many sources detailing how segregated our school systems still are.

        So segregation actually provides a good case study here. We had Brown, We had the 101st Airborne in Little Rock, we had the 1964 Civil Rights Act, and we had Congress begin funding K-12 education but only on the condition that schools not be (de jure) segregated.

        And so we think the government had a tremendous success,we put a check mark in the government’s win column, and we move onto other issues. But when we look closer we realize the degree to which American schools are still segregated.

        I’m not arguing integration was a complete failure, not by any means (de jure segregation being unlawful is itself a success). But the evidence does not show it as a total victory, or anything like it, for the federal government.

        What I’m trying to emphasize here is that as careless as some conservatives/libertarians are with their assumptions of government failure, some liberals are just as careless with their assumptions of government success. That a program or rule exists is not evidence of success, but only of effort. To count the program’s existence as evidence of success is to measure the inputs, not the outputs.

        The reason it’s not been a complete success can be laid at the hands of citizens and local politicians, sure. But, ahem, it’s the government’s job to craft policies that actually do move them in the right direction, and if government fails to do so, it has failed, not the citizens. Call them idiots, nutjobs, and bigots, but they remain the material with which the government has to work.

        So “people don’t like government” is a part of what the government has to work with; it’s an inherent part of the structure of the policy arena within which government is acting. The people are the problem, and when a fix to a problem–in any domain–doesn’t work, it’s pointless to blame the extant problem for not responding to the intended fix; the intended fix failed, and that’s where criticism should be directed.

        Or as I say frequently: Design policies for the public you have, not for the public you wish you had.

        I don’t know your history, but perhaps like me you are familiar with bosses who blame failures on their subordinates being bad followers. My take is that anyone who blames the followers is in reality trying to mask their bad leadership.

        Report

      • Or as I say frequently: Design policies for the public you have, not for the public you wish you had.

        Or to put it another way, if your policy is dependant on having the ‘right kind of people’ in charge, your policy will fail.

        Report

      • ,

        Yes, but I’m actually looking at it from the other end. If your policy depends on having the ‘right kind of people’ as subordinate to it, your policy is likely to fail.

        Report

      • “That a program or rule exists is not evidence of success, but only of effort.”

        You assume that success is the goal. But what if effort is the goal? What if, as in religion, virtue is found not in success but in the attempt? Perhaps all have sinned and fallen short of the glory of truly-integrated schools, but that’s not a reason to stop tying funding to busing policies and demographic distributions.

        Report

      • If your efforts continually fail, you’re obviously not really trying. “But, Lord, I kept going to the bars to prove my resolve not to drink” is probably not a sufficient response to God when standing at the Pearly Gates hearing him criticize you for perpetual drunkenness.

        Report

      • “But, Lord, I kept going to the bars to prove my resolve not to drink”

        Don’t be silly, no one would ever do that — you go to the bar to celebrate the fact that you got through the whole day without a drink.

        Report

  13. Responding down here. I’m playing a bit of catch up since I haven’t been that active here since Friday. I’m moving through these as quickly as I can. I’ll get to everyone.

    Uh, no, that’s not what I said. I was proposing we stop with the fantasy that the Post Office isn’t part of the Federal government, not that we make the vague ‘Federal government’ operate the thing.

    I’m not aware of anyone making that argument. I was operating from the reality that the Post Office is supposed to be a self-funded entity that is part of the federal government. I’ve been using the term “profitable”, but I’ll admit that may be a bit of a stretch. Although profitability is preferable, it’s not necessary. Break-even is necessary.

    And I point you to ‘P.L. 109-435 PSRHBF expenses*’, which is what I am talking about.

    Without digging into the financials too much (i.e. the 10-K), it appears that they are reporting it separately on the income statement (although I think it is part of the total expense line item as well), but the fact that you see an accrued liability for the same line item is a red flag – they aren’t making the payments – otherwise, the appropriate accounting would be a credit from cash.

    This has been confirmed in the media reports as well. For the years ended September 2011-2013, the USPS didn’t make the payment. I’m not sure what has happened this year.

    1) To address the issue of if they *need* to partner with a bank for experience: It’s hard to lose money on the ‘banking side’ by operating a savings and penny-ante loan bank. To lose money, you have to do some risky things, all of which are in the categories of things most people think this bank shouldn’t be doing. (Recently, those things are stupid mortgages.)

    To come back to this, I think it’s quite easy to lose money. There are sunk capital costs and ongoing operating expenses attributed to bank branches. Can that specific bank branch generate enough revenue from the deposits it takes to be profitable, especially when the deposits are smaller and the population of potential borrowers are low-income and high credit risk? It doesn’t help the case when the banks are subject to the Community Reinvestment Act and will want to remain compliant under that law. The banks don’t necessarily have to lend if sound lending practices determine that a potential loan is too risky but they’ll have to spend a lot of time explaining this to bank regulators.

    I’m just saying a good portion of its *current* problems are Congress-made.

    Perhaps, but I think the consistent theme in the media reporting about the USPS is that it’s a troubled organization facing negative revenue pressures and significant cash constraints.

    (Now, why Dave continues to think the post office is incompetent money hole, when he *also* knows the actual current problem that the post office is require by law to give large amounts of money to a pointless fund run by the US government, is unknown, but I will address that in a different post.)

    The current problems are more complicated than you care to admit. Again, please feel free to read any number of articles on the subject. They’re all over the internet. This is nothing new and hasn’t been for a long time.

    That without that law, the post office would have an extra $35.5 billion,

    Less the $15 or $16 billion or so that they are supposed to have paid but didn’t.

    You keep conflating ‘We are not going to do that.’ and ‘It is impossible to do that.’. Those are not the same thing.

    We are *not* going to set up a postal bank using just the post office. I completely agree with that statement. It will not happen.

    It won’t happen because, politically, we have chosen not to have it happen. It didn’t happen not because it was impossible, it didn’t happened because our political system didn’t want it.

    An additional question is if such a thing would be a money-sink (aka, slowly losing money), or would even be non-disastrous (Hugely losing money, or something like the ACA rollout.).

    I think you and I disagree about that, and we can discuss it further if you wish, but that’s not the same as ‘we can’t do it’. The Federal government has trillions of dollars, there is almost nothing it can’t do, financially. It can manage to operate a completely incompetent bank for centuries.

    If there’s confusion, it’s the fact that the venue keeps going back and forth between whether or not postal banking is possible (the argument of some here) and whether or not the USPS, under its current situation, can get into the postal banking business and have it achieve the objectives it thinks it can achieve (the subject of the January 2014 white paper and a number of articles written by liberal pundits and Elizabeth Warren around the same time). The latter is a resounding No.Freaking.Way. Why. Because it IS impossible for the reasons I mentioned above.

    Furthermore, to the extent there was political will to help the Post Office, my guess that the purpose would be to stabilizes its operations and finances, allow it more flexibility with respect to revenue rate increases and deal with the pension issue – basically a taxpayer funded bailout.

    While I’m far from an “anti-gummint” libertarian, I do not subscribe to the theory that our solutions are limited by the extent of our imaginations. I believe Matt Yglesias may have referred to that as the Green Lantern Theory of Geopolitics several backs when he criticized the neocons for their brand of wishful thinking. I could be wrong on that.

    We can kick around abstract ideas all we want and say “if we have the political will, we can do it”. However, at some point, the rubber has to hit the road and reality will play a factor. That’s why we have the Affordable Care Act and we’ll never have a single payer system in this country.

    Under your theory, if we had the political will, we could just nationalize the banks. There’s your new and improved Bank of America right there.

    You put in people who want to do that, and actually provide enough money that the bank could get off the ground, and it could happen.

    And if we fire enough bullets and drop enough bombs, we can wipe out every terrorist that poses a security threat to the United States.

    Risking a billion dollars is something dangerous for the market. It’s not dangerous for the government.

    I don’t think I agree with the use of terms here. Risking a billion dollars in not dangerous for investors, at least those that know how to risk that capital (as most sophisticated investors do). Investors will not just throw money at something. They will undertake substantial due diligence and only invest if they believe the project can generate the required returns given the level of risk pursuant to their investment parameters.

    The government could pick a few locations, ones that need minimal changes, set up postal banking there, and see what happens. If it doesn’t work, well, it doesn’t work. The government would be out…some building changes and employee time, and that’s about it. (Like I said above, don’t even do loans at the start, so there’s no actual ‘bank risk’. Just checking accounts.)

    If you would like, I can elaborate on this further but I think you are grossly underestimating the amount of work it would take to figure out which facilities are suited for something like this. To be able to make those decisions requires having facts at their disposal that they probably don’t have nor wouldn’t need to have. The information would have to be collected and that would take a shitload of time and probably money (an outside advisor is probably required here – speaking from professional experience).

    As for liquidity….wow, everyone is really assuming that this would operate like a real bank…(Frankly, I don’t see the point of even having ‘the USPS’ as the bank. Let’s just have the ‘Federal government’ do it, and the post offices merely the interface point.)

    In a way it would have to operate like a real bank or at least be subject to the regulatory constraints.

    I am aware of that, actually, which is why I wanted to start with stuff that basically is just cashier stuff, which the post office already does.

    Having read the postal report, there were services that I didn’t think were a big deal to offer and could be handled at a Post Office (check cashing for example) but there aren’t that many of them and I don’t think the fee volume would be there, but that was my thought eight or nine months ago.

    The other thing to consider is that a lot of banks are moving away from on-site tellers. My local BofA branch has ATM machines that allow me to interact with tellers operating out of a call center. The people that are on-site handle customer service related issues and/or loans. The functions that you describe above aren’t being done by tellers anymore, at least in some banks. Most of it is through ATMS.

    From what I can tell, these are the basic skills required of bank tellers. Open accounts, accept deposits, and send checks to a clearinghouse. Like I said, basically, offering one more product.

    Bank tellers have far better customer service skills than anyone I’ve ever seen working at a Post Office. They’re also far more polished and come across in a far more professional manner. Postal employees would require a lot of training to get up to what I think is the required skill set. Their interaction skills aren’t particularly impressive, at least not to me.

    There’s an entire class of people where, in their mind, banks do not exist to earn interest. They have, literally, never gotten more money out of the bank than they put in, and usually the money flow is completely reversed with fees and whatnot.

    I think we finally agree on something. If I didn’t address everything I’ll get to the rest of it later.

    Report

    • I’m just saying a good portion of its *current* problems are Congress-made.

      The irony of this statement just hit me. We’ve been accused of being anti-gummint, but the best argument being made by the other side is “it ain’t this part of gummint that fucked up,” it’s that part of gummint that fucked up.” And that’s our pro-gummint argument, I guess.

      Anyway, let’s say we move to DavidTC’s hypothetical situation. What’s our best guess about whether Congress eventually fucks it up again?

      Report

      • The irony of this statement just hit me. We’ve been accused of being anti-gummint, but the best argument being made by the other side is “it ain’t this part of gummint that fucked up,” it’s that part of gummint that fucked up.”

        Congress isn’t ‘fucked up’. Congress is operating almost exactly how certain people wish it to operate. Crazy people. People that have been elected there. They don’t wish anything to happen, and it doesn’t. (And there is at least some portion of them that dislike every single government agency they can think of, and would be happy to see the USPS fail.)

        Now, it’s possible to argue that those crazy people should have less of a say in Congress, when compared to the actual political climate in the country. And that they really only have the power they have because of gerrymandering in the House, and a dumb equal state representation setup in the Senate. That in a country with actual proportional representation, we’d have a lot less crazy people elected.

        But those problems are caused by state governments, and the US constitution, respectively. They aren’t caused by ‘the government’. ‘The government’ has basically no say over who actually ends up in Congress. It can’t make the states stop gerrymandering. It can’t alter the constitution, especially not *that* part.

        Although I will acknowledge a *little* of the stupidity is, and was, due to Senate rules, so that bit is the fault of ‘the government’.

        Report

      • Anyway, let’s say we move to DavidTC’s hypothetical situation. What’s our best guess about whether Congress eventually fucks it up again?

        The answer is: ‘That will happen literally the first time the Republicans are able to do so.’

        I mean, it’s a service that stops poor people from *losing money*. Not really subsidizing them in any way, not giving them money, just saying: The government will provide you access to a bank account, something that doesn’t cost much for it to do(1), something that every member of society needs, and something that the private market manifestly does not want to provide you.

        Elected Republicans would be completely enraged. And, yes, that sounds very nasty and partisan, but there it is. *It’s something aimed at helping poor people*.

        Most of my ideal universes are, apparently, set after the collapse of the Republican party.

        As for how long it would take *without* a political party intent on sabotaging it? I don’t know, but the thing about *non-stupid* Congresses is that they fix things. For example, I suspect that the post office pensions would have been fixed already. (I’m actually a little surprised they weren’t fixed in that short window in Obama’s first term where Democrats controlled everything, but that window wasn’t as long as people think and Congress was pretty busy. And maybe no one actually understood how disastrous it was yet.)

        1) I’m still not entirely convinced the government couldn’t provide bank accounts, for free, and still make money from all this just by not paying interest, which absolutely none of these people expect. Remember, banks get fees from merchants from using debit cards. Plenty of non-poor people have bank accounts that apparently don’t cost banks anything, somehow.

        I mean, how much money would the government save from having to mail out welfare and IRS checks? (2)

        That said, I’m not proposing it *because* it would be free, or even revenue neutral. This would be a pretty good anti-poverty measure even if it did cost a few hundred million a year to run.

        2) It has suddenly occurred to me that government *already runs a debit card system* that I had totally forgotten about. It’s called ‘food stamps’.

        46 million people *already have a bank account with the government*…they’re just only allowed to use the money on specific things, and only the government can put money in the account.

        Report

      • You can’t talk sensibly about gerrymandering without talking about U.S. Representatives’ influence in their state parties. And you can’t so easily distinguish “the government” from the Constitution that constitutes it. “It’s not the government that’s the problem, it’s the way it’s structured and it’s the people in it” is an entirely incoherent statement.

        Most of my ideal universes are, apparently, set after the collapse of the Republican party.

        If your argument is that things will work great just as soon as those people go away, you need a better argument.

        This has just gotten silly now. Your only argument boils down to “government is great, really, if I could just constitute it thisaway that doesn’t allow any influences I don’t like.”

        Report


      • If your argument is that things will work great just as soon as those people go away, you need a better argument.

        James, you really need to stop attacking something for being a hypothetical thing that everyone freely admits cannot happen in the current political environment for…being unworkable in the current political climate.

        I don’t know if there are some magical words I can say to make you understand how this works, BUT WE ALL FUCKING KNOW IT WON’T HAPPEN. We all know it would require a different Congress than we, in fact, have. There is no point saying it again.

        And it looks *exceptionally* stupid to attack to attack it for that when you yourself just posed it as a hypothetical and asked for comments on it. Just now. Scroll up a little, right there. This is actually a response to *your hypothetical*.

        “It’s not the government that’s the problem, it’s the way it’s structured and it’s the people in it” is an entirely incoherent statement.

        Then, as you appear to not be getting my-not-so-subtle hints and dancing around the issue, I will say it outright:

        It is not ‘the government’ that is the problem. It is the Republicans that are the problem. Period, end of story.

        Oh no! I’ve become partisan. But I’m getting a little sick of anti-government people blaming ‘the government’ for insane behavior of *elected Republicans*. No. You do not get to do that.

        If it was not for the Republicans and their pretend priority of spending (Which is actually only relevant for agencies they don’t like and when their party is not in power.), no one would care about the USPS and whether or not it made a profit, which is an idiotic thing for a government agency to have to do.

        A few billion a year (And it would only be a few billion if not for dumbass laws.) is a perfectly fine operating cost for the government to pay for the post office.

        And I have no problems with trying to trim waste from that. But I have problems with pretending the entire post office is in danger of collapse because the thing is a net loss. Pretty much the entire non-tax collecting side of the government is a net loss, but I don’t see people claiming that the FBI is about to fail because of that, or Federal highway funding! (And I also don’t see people claiming the IRS is the government success story, because that is *equally* stupid.)

        The fact that, occasionally, the post office can break even or make money is completely irrelevant to how it should be operated. By all means, make money with it if possible, but if not, *suck it up*. Jesus Christ, we give ethanol more subsidies than the post office needs.

        Report

      • Ah, we’re back to everything’s sunshine and strawberry-scented unicorn farts except for those monkeyfishers over there who are the monkeyfishing cause of all our monkeyfishing problems.

        Boring.

        Report

    • Less the $15 or $16 billion or so that they are supposed to have paid but didn’t.

      That…doesn’t actually change my point.

      The USPS has $61.5 billion in liability as of 2013. And there is a total of $35.5 billion that they have _either_ paid, or have _not yet_ paid but they still owe, towards this dumbness.

      $35.5 billion of the $61.5 billion dollar hole that the USPS is in is due to this one dumb law. More than half.

      If they had not had this requirement imposed on them, they would only have $26 billion in current liability. (Which would make their total net deficiency only a few billion.)

      I believe Matt Yglesias may have referred to that as the Green Lantern Theory of Geopolitics several backs when he criticized the neocons for their brand of wishful thinking. I could be wrong on that.

      Yes, but that’s the Green Lantern Theory of Geopolitics for a reason. We can’t just spend money and make things happen in other countries, no matter how hard we wish. (Actually, I think Yglesias’s point might be that we sometimes don’t even bother spend money or resources, the neocons just *wish* things would happen. I’m not sure, though.)

      We sorta *can* just spend money and provide government services in the US.(1) We might not do it *efficiently*, but we certainly can do it.

      1) Yes, yes, we have to stay within some sort of plausible spending universe there, and the project actually has to fit within the US. We can’t spend 40 trillion dollars on something, or do a project that requires a trillion manhours. But we’re talking about a smallish bank here, where even moderately sized regional banks have less total assets than a single aircraft carrier costs to build.

      I don’t think I agree with the use of terms here. Risking a billion dollars in not dangerous for investors, at least those that know how to risk that capital (as most sophisticated investors do).

      I meant that spending a few billion dollars on this is might have too much risk for investors, and hence might not actually happen in the first place, or might only happen under pretty unfavorable terms for the government.

      Or, in other words: Investors will only spend money if they think there will be a profit. The Federal government does not need to see a profit.

      Of course, the only reason the post office wants to do this is that they *do* want a profit, so the entire premise is doomed to fail.

      The functions that you describe above aren’t being done by tellers anymore, at least in some banks. Most of it is through ATMS.

      Well, yes, I know that, which is why I’m a little confused at all the ‘training clerks’ talk to start with. I’m not sure what you mean ‘describe above’, though. We’d need postal clerks to accept the rare cash deposits and to open accounts, and a few other things.

      The rest of it would be an ATM in the post office wall.

      Report

      • That…doesn’t actually change my point.

        It doesn’t change my point either – anyone that thinks that the Post Office’s problems are rooted in the 2006 law requiring it to fund pensions does not understand the full extent of the Post Office’s problems. Yes, it is A problem because they can’t fund it but it’s not the only problem, not even close.

        We can’t just spend money and make things happen in other countries, no matter how hard we wish.

        Yet, you argue that we can do it here. That comes across like a double standard.

        We sorta *can* just spend money and provide government services in the US.(1) We might not do it *efficiently*, but we certainly can do it…

        1) Yes, yes, we have to stay within some sort of plausible spending universe there, and the project actually has to fit within the US. We can’t spend 40 trillion dollars on something, or do a project that requires a trillion manhours. But we’re talking about a smallish bank here, where even moderately sized regional banks have less total assets than a single aircraft carrier costs to build.

        This statement is far too abstract to be any help. Saying that we can do anything in theory doesn’t help without any kind of indication as to how it gets executed in practice. Even your ideas as to how it gets executed are too abstract for my liking.

        I meant that spending a few billion dollars on this is might have too much risk for investors, and hence might not actually happen in the first place, or might only happen under pretty unfavorable terms for the government.

        That’s right. Unfavorable terms would, in this case, include a return on invested capital as well as control provisions.

        Of course, the only reason the post office wants to do this is that they *do* want a profit, so the entire premise is doomed to fail.

        Not true. Please read the Inspector General’s January 27, 2014 White Paper, you would not have made that statement.

        Well, yes, I know that, which is why I’m a little confused at all the ‘training clerks’ talk to start with. I’m not sure what you mean ‘describe above’, though. We’d need postal clerks to accept the rare cash deposits and to open accounts, and a few other things.

        I’ll repost my last comment:

        Bank tellers have far better customer service skills than anyone I’ve ever seen working at a Post Office. They’re also far more polished and come across in a far more professional manner. Postal employees would require a lot of training to get up to what I think is the required skill set. Their interaction skills aren’t particularly impressive, at least not to me.

        Your “postal clerks” are going to need the kind of people skills you don’t find in your typical post office.

        Report

      • Your “postal clerks” are going to need the kind of people skills you don’t find in your typical post office.

        These are poor people we are talking about, they don’t need polished, competent customer service agents to help them with their money.

        Seriously, where do you get off thinking we should invest resources like that on poor people. You are a bad, bad republican.

        ;-)

        Report

      • These are poor people we are talking about, they don’t need polished, competent customer service agents to help them with their money.

        Seriously, where do you get off thinking we should invest resources like that on poor people. You are a bad, bad republican.

        I hate poor people…and kittens…and bacon.

        Report

      • Bad customer service from Postal employees. Really? Okay if everybody says that is true it must be. However the last time i was at line in the PO there was a really friendly PO guy who smiled, joked, talked to the children and clearly knew a few of the people in line. The other PO person will quick and efficient. At my bank i almost always have tell them what i want them to do with the check i’m depositing even though i write it into the note area. Once every three months or so i have to tell them the account number even though that is also written in. PO employees are most long term workers while most bank tellers are young and far less prone to be working in the same place in five years.

        Some things are more of roarsach test then we wish to admit.

        Report

      • To be fair, I’ve had excellent customer service & horrible CS from USPS employees.

        However, by & large, the bulk of USPS CS experiences I’ve had have been largely indifferent.

        Report

      • I have to side a bit with Greg here. Not only is the service in my PO pretty reasonable (although both the bank and the CU I use are a little better, imo), but a majority of Americas have a positive view of the PO, and as I mentioned elsewhere, in general most Americans report favorably on their interactions with government bureaucracies (DMV horror stories notwithstanding).

        Tangentially, though, I found this, which is less about the public’s view of the USPS and postal banking than it is about bad headlines. The body of the article reports:

        Nearly a fifth of the country doesn’t know what to make of the idea of getting basic banking services from the U.S. Postal Service (USPS), according to a new poll, but support for the idea outweighs opposition by a substantial margin among the rest of the populace.

        The poll found 44 percent in favor of and 37 percent opposed to the idea put forth recently by Sen. Elizabeth Warren (D-MA) to have the USPS replace check-cashing and payday-lending businesses. The survey found 19 percent unsure of their position. That significant level of uncertainty in the YouGov/Huffington Post survey of nearly 1,000 people suggests that public opinion of the postal banking idea could still break in either direction.

        Nice clear reporting. Not bad at all. Then there’s the headline:

        Poll: Americans Like Elizabeth Warren’s Call To Replace Payday Lenders With Post Office Banking

        Thank you, “Think”progress. There ought to be some kind of shame award for that type of misleading headline writing.

        Of course technically it’s true. That 44% that have an actual opinion and are favorable are Americans. But by that standard one could just as well focus on the 19% and headline the article “Americans undecided on Elizabeth Warren’s proposal.”

        Report

      • James,
        the service in my local post office is abominable. And everyone loves it.
        You see, we have a lot of elderly people around, who come down to the post office and want to chat with the workers, rather than pay and get about their business.

        So there’s ALWAYS a long line, and it’s not even a long line that’s moving.
        But, because there are a lot of old folks, and very few working age people
        need to go to the bank in person (they have an auto-banking thing for offhours),
        everyone bloody LOVES the service!

        Even if it sucks.

        Report

      • @james-hanley

        You hate bacon?!

        …you are dead to me…

        Hey! The federal government has trillions of dollars. I’m sure that if we had the will, we could find a way to spend some of that to bring me back to life, right?

        Report

      • Re: Customer Service

        Both of the banks I deal with daily are Credit Unions (one local, one (inter)national). The only large banks I deal with are connected with my credit cards & while the customer service I get from the banks is good (the reps really try), that is about where it ends, since in general getting anything done is a PITA.

        My CUs, on the other hand, are awesome!

        Report

      • Oh hell yeah, if I could just get them to forgive enough of my underwater mortgage to sell that crap house, I’ll bring you back to life & share my beer with you!

        Report

      • Some things are more of roarsach test then we wish to admit.

        The second we move away from what can or can’t be done in the real world and over to what we may or may not be able to do hypothetically, this plays a huge part in it for everyone.

        I still think my comment – Your “postal clerks” are going to need the kind of people skills you don’t find in your typical post office. applies if only because of my belief that a different skill set is required when dealing with bank customers. People will have different opinions on the matter and it’s not like we can offer anything other than anecdotal evidence.

        Report

      • Tangentially, though, I found this, which is less about the public’s view of the USPS and postal banking than it is about bad headlines.

        Had I completed my post on the subject, I would have had a few things to say about this one, none of them particularly good.

        Report


      • It doesn’t change my point either – anyone that thinks that the Post Office’s problems are rooted in the 2006 law requiring it to fund pensions does not understand the full extent of the Post Office’s problems.

        The Post Office continues to deliver mail. Pretty quickly, with a small error rate. And, hence, is is functioning fairly well. It is managing to do what it is designed to do.(1)

        They, like many government bureaucracy, might be large and unwieldy, they might even have waste and fraud. I’ve got no objections to trying to fix *those* problems, if they do exist.

        However, the problems people keep talking about aren’t those problems. The reason the USPS is in desperation, the reason it’s in a deep hole, the ‘problems’ everyone keeps talking about…all *those* problems are completely artificial. We created rules that said they had to pay their own way. We created laws that sucked money out of them, hindering that. We restricted their ability to expand services, and turned down all their requests, so they can’t make money that way.

        So there *might* be real problems, but I’ve seen no real evidence presented for that. The only ‘problems’ here is evidence towards ‘The post office is not profitable.’.

        This is, itself, in some dispute (Of course it’s not profitable if we don’t let it do what it wants and require it to pay huge chunks of money out.). But non-profitability is not an indication of a problem with a government service anyway. Lots of government services are not profitable.

        If technology has changed things where letter delivery cannot be profitable, that is not an indication of a ‘problem’ at the post office…it’s an indication of the fact that, if we continue to operate the post office, it’s going to cost us money.

        1) As opposed to, for example, the VA, which isn’t managing to do what it’s supposed to do. Or the SEC. Or the Minerals Management Service and their cocaine parties. Or FEMA during Katrina, although they are better now. State DMVs are often this. There are plenty of government bureaucracies that are currently complete clusterfucks, either due to regulatory capture or lack of funding or complete apathy. The Post Office is not one of them.

        Report

      • Plus, he hates cats. (And you know who liked cats…)

        Ummm, Egyptian Pharaohs? Not sure why you are harshing on those guys? Sure, a bit megalomaniacal, but I can appreciate a touch a megalomania in a god-appointed leader. Besides, they got shit done (Hello! Pyramids!). Cats seem like a good thing.

        Maybe we should get Obama a cat?

        Report

      • Now we’re getting into repetitive territory:

        The Post Office continues to deliver mail. Pretty quickly, with a small error rate. And, hence, is is functioning fairly well. It is managing to do what it is designed to do.

        It was also designed to be self-funded and therefore is not doing what it was designed to do.

        They, like many government bureaucracy, might be large and unwieldy, they might even have waste and fraud. I’ve got no objections to trying to fix *those* problems, if they do exist.

        Irrelevant

        So there *might* be real problems, but I’ve seen no real evidence presented for that. The only ‘problems’ here is evidence towards ‘The post office is not profitable.’.

        Declining mail volume, as was mentioned above, I think by Mark. If this number does not increase, and substantially, there is a problem.

        http://blogs.wsj.com/marketbeat/2013/02/06/four-charts-showing-postal-services-decline/

        If you need more evidence, here’s a 2010 study projecting mail volume growth to 2020.

        https://about.usps.com/future-postal-service/gcg-narrative.pdf

        From the executive summary:

        We forecast U.S. postal volumes to decrease from 177B pieces in 2009 to around 150B
        pieces in 2020 under business-as-usual assumptions. Notably, volumes will not revisit the
        high-water-mark of 213B pieces in 2006 – on the contrary, the trajectory for the next 10
        years is one of steady decline, which will not reverse even as the current recession abates.

        213 billion pieces at the high point in 2006 to projected 150 billion in 2020. Can you please explain to me how, with these numbers, revenues are supposed to increase.

        There are real problems. Everyone else in the world except you recognizes it. Hopefully, you’ve seen the light.

        This is, itself, in some dispute (Of course it’s not profitable if we don’t let it do what it wants and require it to pay huge chunks of money out.). But non-profitability is not an indication of a problem with a government service anyway. Lots of government services are not profitable.

        All we need is a self-funded organization. A profit is nice but breakeven will do.

        If technology has changed things where letter delivery cannot be profitable, that is not an indication of a ‘problem’ at the post office…it’s an indication of the fact that, if we continue to operate the post office, it’s going to cost us money.

        Yes it is a problem at the Post Office because the Post Office is supposed to be self-funded.

        It can’t be if is unable to either (1) increase its revenues or (2) take the appropriate steps to reduce expenses quickly. With mail volume rejected to decline, there isn’t a rate increase big enough to reverse course. With respect to (2), the PO may need to make draconian cuts, but the problem with that is that there’s no political will for it.

        The only reason you are arguing this is not a problem is that YOU see no problem with having other people foot the bill. That’s hardly a convincing argument.

        Report

      • Dave,

        I think you’re missing DavidTC’s point, which as I take it is that if we decide that the post office is only intended to deliver bits of paper at a net cost to the public treasury, then of course it can be successful at doing that.

        Report

      • It was also designed to be self-funded and therefore is not doing what it was designed to do.

        No. In fact, technically, it’s the other way around:

        U.S. Code Title 39 § 404
        (b) Except as otherwise provided, the Governors are authorized to establish reasonable and equitable classes of mail and reasonable and equitable rates of postage and fees for postal services in accordance with the provisions of chapter 36. Postal rates and fees shall be reasonable and equitable and sufficient to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.

        The post office is, at no point, required to operate within on the money they make. What is required is that the postal rates and fees be set *to make sure the post office can operate*.

        If there’s an organization here not doing what it’s ‘designed’ to do, it’s the postal governors, who, despite being clearly directed to do so by law, refuse to set rates and fees so the USPS *can* operate.

        Now, if you want to say ‘I’m including the postal governors as part of the post office, so if they are dysfunctional, the post office counts as being dysfunctional’, well, feel free to do that. But none of your actual claims point in that direction, and the solution to *that* problem is pretty simple: Stop letting the governors break shit, either by taking away their power or replacing them.

        I think you’re missing DavidTC’s point, which as I take it is that if we decide that the post office is only intended to deliver bits of paper at a net cost to the public treasury, then of course it can be successful at doing that.

        Yes. As opposed to the VA, for example, which is *not* able to manage what is supposed to be doing.

        There’s a pretty large difference between ‘We want to operate a government service with one level of funding, but it’s taking about 10% more to operate than that’ and ‘The government service is broken and people can’t use it at all, or can barely use it.’.

        People in this discussion keep claiming the USPS is the latter, but it not. ‘Being slightly more expensive than we like’ and ‘broken’ are not the same fucking thing.

        Report


      • Your criticisms of the VA are just coming from your anti-gummint attitudes.

        That’s absurd. As someone on the left, it’s clearly because I hate the military and America.

        Report

Comments are closed.