The road to democratizing money, to disarm the pampered plutocrats and promote the public interest, is a bumpy one. Yet, along the way, changes are being considered not only for how money is created and by whom, but also in banking itself. Careful consideration is critical.
Among the latest proposals is to restore postal banks to help the nation’s poor, who are usually stonewalled by private banks that mainly cater to the affluent minority.
Ellen Brown, president of the Public Banking Institute, which held its first-ever conference on public banking in April in Philadelphia, covered public post-office banks in a recent article — written just after the National Association of Letter Carriers adopted a resolution at their late-July national convention in Minneapolis “to investigate the establishment of a postal banking system.”
The US operated postal savings banks in the Post Office from 1911 until its abolition in 1967. And now the union which adopted the resolution sees postal banks as a possible means of rescuing the United States Postal Service (USPS). The resolution noted that postal banks could be a new revenue source to save the public postal system and to preserve living-wage jobs—though, in a high-tech world where every email is one more piece of correspondence without a postage stamp, the Internet alone hits the USPS hard.
But the union isn’t just touting self-preservation: “A USPS bank would offer a ‘public option’ for banking,” added the resolution, “providing basic checking and savings — and no complex financial wheeling and dealing.”
Ms. Brown says there is a “long and successful history of postal banking” in places such as “Germany, France, Italy, Japan and the United States itself,” and that postal banks “could serve the nine million people [in the U.S.] who don’t have a bank account.” An estimated 21 million mostly low-income people — robbed by those highly usurious private check-cashing and cash-advance services around the country — instead could obtain access to safe banking within the postal system, as Ms. Brown sees it.
In her view, inefficiency is not what’s bankrupting the USPS. It has been self-funded throughout its history, she says. But in 2006, Congress required the USPS “to prefund postal retirees’ health benefits for 75 years into the future” — a heavy burden that few, if any, other public or private companies must carry.
One reason public postal banks — already operational in other nations such as Switzerland, New Zealand and Japan — are profitable is because “costs are low and you have an existing market [that needs] simple banking,” Ms. Brown told this writer. “They’re not paying bonuses.” And because the infrastructure is already built, “they are not paying for brick and mortar.”
A postal bank apparently would resemble a simple savings bank. An extra teller window may be present at post offices. “It’d give people the ability to put their money somewhere safe and write checks on it,” Ms. Brown said. Small fees, presumably, would be charged to help fund the USPS which, because of its low overhead costs, could pay decent interest on savings accounts, as Ms. Brown understands it.
This writer pressed Ms. Brown on why the PBI stresses banking reform so much over monetary reform, as some analysts (and a current House bill, HR 2990, sponsored by Rep. Dennis Kucinich, D-Ohio) focus on creating money, interest-free, as a purely public enterprise, but some of the critics argue that government should not get into the banking business — apparently concerned that public banking could be an excuse to avoid monetary reform so private banks ultimately can keep creating money and credit and not lose their dominion.
Ms. Brown replied, “One thing the NEED Act is missing is public banks,” referring specifically to HR 2990 — formally titled the National Emergency Employment Defense Act. This monetary-reform bill is based on the American Monetary Act from the American Monetary Institute (AMI) of New York. “The AMI people don’t want to talk about public banks.”
While AMI President Steve Zarlenga was not readily available for comment (see Monetary.org for more information), Mickey Paoletta of the Citizens Reform Center, a Pennsylvania-based outfit that studies money and banking and helps foreclosed homeowners, remarked, “Let the government create money” and “let banks ‘loan’ money, but not create it.”
He feels it doesn’t matter much whether banks are private or public, provided they follow strict rules and perhaps charge one-time, affordable fees but forgo charging interest. The main thing, he stressed, is that banks must surrender their societal dominion — now achieved by charging compound interest, buying the media, and steering society in a manner that elevates a super-rich minority over the majority who become paupers under the color of law. As for postal banks, we’ll have to wait and see how serious the postal union is about pushing this proposal and whether it requires an act of Congress.
Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at email@example.com. For more information on public bank options see PublicBankingInstitute.org. For postal reform options see deliveringforamerica.com.
From The Progressive Populist, September 15, 2012
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