Senator Mikulski Fights Closure of Easton Mail Processing Facility on Eastern Shore
Published on Apr 18, 2012On Wednesday, April 18, 2012, Senator Barbara Mikulski (D-Md.) spoke out on the Senate floor against the closure of the Easton Mail Processing Center and outlined her amendments to the Senate postal legislation which would ensure an open and public process as the United States Postal Service (USPS) studies the closure of mail processing centers across the country.
Boston is of course ground zero for global hedge fund controlled Harvard University as Baltimore is ground zero for global hedge fund controlled----Johns Hopkins University so they both will push these privatization policies. The DC area does indeed have these same structures -----
'The Staples pilot project, called the Retail Partner Expansion Program, began in October. Eighty-two stores nationwide, though none in the D.C. area, have sections resembling mini-post offices. They sell a variety of products and services, including stamps, Priority Mail, Priority Mail Express and package handling. Staples doesn’t offer registered mail, money orders, stamped envelopes or post office boxes'
Baltimore's USPS facilities are filled with outsourcing, temporary workers, and all that goes with making it harder and harder to provide quality service.
This was happening as Mikulski gave this speech-----remember, it was Clinton neo-liberal super-majority with Obama that appointed a Post Master General in Donahue who embraced all budget-balancing need to downsize and outsource.
USPS and Staples Celebrate New Pilot Program in Shrewsbury Location
Staples locations to offer customers easy access to postal service and products
November 14, 2013
BOSTON — If one-stop shopping and shipping appeals to you then it’s time to celebrate. The U.S. Postal Service (USPS) and Staples are launching a pilot program to open postal services retail counters inside select Staples locations including the Shrewsbury stores located at 571 Boston Turnpike.
Staples, Inc, (Nasdaq: SPLS), the largest office products company and second largest internet retailer, is the first retailer to take part in a USPS pilot program dubbed the Retail Partner Expansion Program.
The Retail Partner Expansion Program is a pilot designed around a few simple ideas — service, convenience and providing options to customers. The first of its kind, the USPS/Staples program offers access to postal products and services inside select local Staples’ stores. Once inside, customers will find a familiar looking counter resembling a mini post office containing the most popular postal products and services.
The postal products available in the Shrewsbury Staples stores include stamps, First-Class Domestic and International Mail and package services, Priority Mail, Priority Mail Express, Domestic and International, Global Express Guaranteed and Standard Post. Staples’ associates are fully trained to assist in all these services.
Greater Boston District Manager Charles K. Lynch explains, “By offering postal products and services at Staples, customers have an additional option and access to postal services at a time that may well be more convenient for them seven days per week.”
At Staples, we make it easy with more ways than ever for customers to shop for everything their business needs to succeed,” said Bryan Timko, Vice President of New Business Development, Staples. “The pilot program with USPS is just another great way to help our customers with mailing and shipping right from our stores.”
Once again we will warn----just because an organization or person writes a left labor and justice article or has that stance does not mean they aren't looking out for other interests----here we see JACOBIN and an author from a very global Wall Street IVY LEAGUE COLUMBIA UNIVERSITY in NYC.....but the issues in this article are right on-----our USPS and services again soared from FDR and NEW DEAL and are often filled with the art of labor now being handed to global Wall Street players for pennies on the dollar.
It is an assault on democracy itself-----freedom and liberty can only thrive in societies having strong communications---freedom of press----and CLINTON/BUSH/OBAMA have been dismantling all of the above these few decades......don't fall for the excuse of online and internet decline in postal use----all data shows our USPS was doing fine financially until these outsourcing and defunding policies hit.
Why the Post Office Matters
The privatization of America’s postal buildings, and the New Deal art inside them, represents an assault on democracy itself.
by R. H. Lossin
A now-relocated post office featuring New Deal–era murals in Ukiah, CA. Bob Dass / Flickr
In 1938, as part of Franklin Roosevelt’s New Deal, Ben Shahn and Bernarda Bryson began work on thirteen large murals for the lobby of the Bronx General Post Office (GPO). Collectively entitled “Resources of America,” the Shahn-Bryson murals were inspired by the Walt Whitman poem “I Hear America Singing.”
A large, central panel depicts two columns of workers, backs turned to us as they read the following Whitman lines on a chalkboard:
For we support all,
After the rest is done and gone, we remain,
There is no final reliance but upon us,
Democracy rests finally upon us, (I, my brethren,
And our visions sweep through eternity.
The murals embody a spirit of public luxury that couldn’t be more alien to today’s political discourse. From 1933 to 1939, in the face of the Great Depression, federally funded public works projects created jobs, built infrastructure (including 1,100 post offices, the Bronx GPO among them), and produced one of the largest public art collections in the world. In what is nothing less than an enclosure of public property, this luxury is now being handed over to private interests.
Last year, the Bronx GPO was sold to the real-estate developer Youngwoo & Associates for $19 million. The sale is but one casualty of an ongoing effort to privatize the United States Postal Service (USPS). The assault on USPS is, in turn, only one example of a larger push toward privatization.
But the historical and cultural significance of postal properties makes this a particularly tragic instance of the government’s growing willingness to hand over public property. It is also a singular example of the lengths to which right-wing politicians and their corporate beneficiaries will go in order to justify the transference of public wealth to the private sector.
The Bronx GPO was recently approved for development as a retail space — so members of the public will still be able to physically enter the premises. And because the murals were classified as an interior landmark in 2013, they remain the property of the USPS. This means that the artworks, thankfully, are not subject to the whims of market logic. It also means that USPS — not Youngwoo & Associates — is paying for their intensive and expensive restoration.
USPS has recently been unloading buildings at an alarming rate. According to Steve Hutkins, a literary scholar and editor of Save the Post Office, since 2010 the Postal Service has sold at least sixty properties and perhaps as many as a hundred. The 2012 USPS annual report stated that after a review of four thousand facilities more than six hundred buildings were “earmarked for disposal.” A significant portion of those sold or listed are historic buildings or are eligible for the National Register.
The post office in Venice, CA was sold to a film producer in 2012; Greenwich, CT’s historic post office is slated to become a Restoration Hardware; and Bethesda, MD lost its only building listed in the historic register when its Wisconsin Avenue branch — also a New Deal building with historic murals — was sold for $4 million.
Cooking the Books
As the last thirty years of world economic history have shown, deficits are one of the best ways to ideologically justify the private plunder of public coffers. But the post office is not broke.
The efforts of David Walker, who served as the country’s comptroller general from 1998–2008 and whose right-wing resume is extensive, were indispensable to the companies trying to profit off the panic. The reports issued by the Government Accountability Office (GAO) during Walker’s tenure repeatedly label the postal service as “high risk” and suggest measures such as downsizing the workforce, selling buildings, and outsourcing or fully privatizing certain aspects of its operations.
But in order to do any of these things, the system needed to look like it was actually in trouble.
The political manufacturing behind the agency’s current “crisis” is appallingly obvious if a bit convoluted. A 2002 GAO report estimated that the USPS was liable for close to $100 billion in pensions, workers’ compensation, treasury debt, and post-retirement health benefits.
On review by the Office of Personnel Management (OPM), however, it was discovered that rather than running a deficit, current USPS payments to the Civil Service Retirement System (CSRS), were set to overfund benefit obligations by $71 billion. In 2003, another GAO report reviewed the figure offered by the OPM and estimated the potential overfunding at $103 billion.
The OPM recommended that the postal service reduce its payments, effectively saving $3 billion annually. But even though the post office is mandated to run much like a private business, generating its income from operations rather than tax dollars, the money it pays into the CSRS is figured into the unified federal budget. If the post office were to keep the extra money, the Treasury Department would be out $3 billion dollars annually. In order to keep the $3 billion in payments, the Retiree Health Benefits Fund was created as part of the Postal Accountability and Enhancement Act (PAEA) of 2006.
The PAEA also demands that the postal service pre-fund the next fifty to seventy years of retiree health benefits over the course of a decade — a demand that is not made of any other federal agency. A sensible payment schedule would be something along the lines of $1.5 billion annually over forty to fifty years, but the PAEA requires the post office to pay $5.4–$5.8 billion annually over the next ten years — producing the $5.5 billion figure regularly cited by Congress and uncritically repeated by news outlets.
Public Versus Private
The sense of urgency generated by the postal service’s entirely fake debt is buoyed by the neoliberal myth that for-profit enterprises are masters of efficacy. But historically, the postal service has been effective precisely because it is not organized around a bottom line.
As historian Richard John notes, if the USPS had been created by “market incentives [rather] than political fiat,” heavy, and therefore expensive, newspapers would not have reached the hinterlands — cutting off millions from political debate. The postal service continues to incur some losses fulfilling its public mandate through delivery to sparsely populated areas.
This democratic logic is nowhere to be found in policymakers’ handling of the post office today. Congress’s choice of real-estate broker for the postal properties is a great example. In 2011, the CB Richard Ellis Group (now CBRE), the world’s largest commercial real-estate services firm, was awarded an exclusive contract to market USPS facilities, earning a commission of 2 to 6 percent on sales. Richard Blum, Sen. Diane Feinstein’s husband, was one of the company’s main stakeholders.
Nepotism aside, the company’s handling of these transactions has been problematic at best. CBRE frequently represents both buyer and seller, creating a conflict of interest that is likely to lose the post office millions while making CBRE a pretty penny by doubling its commissions on each sale.
CBRE also manages much of the USPS’s leased property (24,000 spaces) and has been accused of illegally high rent increases, as well as collecting commissions for lease renewals (nowhere to be found in the original contract). Earlier this year, the postal service’s Office of Inspector General recommended the termination of CBRE’s contract.
Profiteering and Pushback
Precisely because the postal service is quite profitable, a number of corporations would be happy to take responsibility for certain aspects of its operations.
A 2013 report by the National Academy of Public Administration (NAPA), one of many right-wing think tanks with similarly anodyne names, suggested that the operations of the post office be divided into retail, processing, and delivery. According to the scheme laid out in the ostensibly independent report presented to Congress, retail and processing would be taken over by private entities, and delivery, the least profitable of the three operations, would continue to be the responsibility of the state.
The report, far from being independent, was funded by Pitney Bowes, Inc, a company that already owns and operates a massive pre-sorting network and makes millions of dollars through contracts with the post office.
USPS offers discounted rates for mail that is pre-sorted by zip code. Pitney Bowes contracts with companies that send large amounts of mail and splits the savings with its clients. It has a direct interest in the privatization of mail sorting services. The study also happened to be coauthored by the same David Walker who, as comptroller general, was behind the series of GAO reports designating the postal service as “high risk.”
The USPS has apparently realized that the symbolism of these sales is not sitting well with the public. The sale of postal buildings has slowed down significantly. There are currently only thirty-eight buildings listed on the USPS properties for sale website. Community activists along with organizations such as the Advisory Council on Historic Preservation and the National Trust have thrown their weight behind the effort to keep these buildings public, and Congress has taken an interest in slowing the sales.
Berkeley’s La Jolla Post Office is a case in point. In 2012, after learning of plans to sell the historically significant property, Brechin gave a talk at the Hillside Club — a community organization devoted to promoting the arts in Berkeley — that led to the Save the Berkeley Post Office movement. City attorney Antonio Rossman filed a lawsuit in federal court to stop the sale, arguing that it violated the National Historic Preservation Act as well as a number of EPA regulations.
The San Francisco court ruled in their favor — kind of. The post office sale isn’t off the table, but it is “under advisement” for the next five years. Brechin speculates that USPS backed off because it feared losing, and thus setting a difficult legal precedent for other sales.
Delaying sales does not mean that the effort to privatize the postal service has ended or even slowed down. USPS recently contracted with Staples to take over portions of its retail business, shifting its efforts toward the building of alternative and private infrastructure.
Blocking these other routes to privatization requires continued public diligence. The National Labor Relations Board has issued a complaint charging that USPS illegally subcontracted this work with the office supply chain store. A favorable decision would return this work to postal employees and safeguard one of the postal services’ revenue streams.
More is at stake than the transference of capital. The buildings and artwork of the USPS embody and maintain a collective memory of government largesse that many seem anxious to forget. Often local in nature, New Deal murals are intimately tied to the under-documented history of small towns, encouraging a sense of civic pride in places that are too economically underdeveloped to be graced by the aesthetic luxury of a high-end art market.
The art itself ranges widely in content and style, depicting nostalgic country view, the aftermath of the Civil War, and scenes critical of capitalist exploitation. More than a mere byproduct of privatization, the disappearance of New Deal artwork from the public sphere is an active repression of the knowledge and memory of social alternatives — a sort of negative propaganda in the service of neoliberalism.
By the time the Bronx GPO reopens, the layers of coal dust and mismatched paint on the Shan-Bryson murals will have been removed. But the now bright and impressive murals will no longer be implicitly linked to a public service in the minds of the spectators. Save for a handful of diligent readers of plaques and an occasional history buff, they will appear to be like any other wall decoration in any other mall.
'Well, real estate, actually, and Geddes and every commenter hints at this. Privatizing the USPS has the potential of being one of history’s biggest — and most profitable — real estate deals ever'.
This is what we shouted as our public universities and our public K-12 schools are enfolded into what are simply global hedge fund corporate research campuses once IVY LEAGUE UNIVERSITIES. The real estate grab in the trillions of dollars is breath-taking and because it is all being done under FALSE PRETENSES----using threats of government deficits caused by systemic and massive corporate and Wall Street frauds and political corruption----it is RACKETEERING ON A GRAND SCALE. This is AMERICAN PERESTROIKA----the mirror of what was done to a USSR collective public wealth when Gorbachev privatized all that was public in USSR declaring Russia a capitalist nation----it was fleeced royally by the same global 1% and their 2% as are now fleecing America. Remember a drunken Yelsin being flown all over the world not having a clue as to what he was doing----much like a REAGAN who served much of his terms fighting Alzheimers----the Clintons are simply crooks.
WE THE PEOPLE must engage in defending our rights----we have the power of numbers---the power of passion---let's JUST DO IT---GET RID OF THESE GLOBAL WALL STREET PLAYERS in both Republican and Democratic parties!
Maryland and Baltimore of course has installed Baltimore Board of Education privatizing the heck out of all our public schools just as this article suggests-----all Wall Street players appointed by ----Wall Street players
'But the real estate company wouldn’t sink. And the deal could be used as a template for other privatizations — your local Board of Education, for instance'
Post Office Privatization Is Probably a Huge Real Estate Deal
08/02/2012 01:14 pm ET | Updated Oct 02, 2012
Andrew Reinbach Journalist
The United State Postal Service (USPS) was created in 1775 — a year before the signing of the Declaration of Independence. In 2006, Congress forced the USPS to pre-fund 75 years of health care benefits in three years, and gave itself oversight powers.
This week, the USPS said it was likely to default on a $5.5 billion payment, and another $5.6 billion payment due in September, unless Congress exercised said oversight powers and allow it to resolve the mess, made worse by declining revenues over the past few years.
Congress promptly adjourned. A bill responding to the Postal Service’s plight passed the Senate in April, but the GOP-dominated House hasn’t taken it up.
Meanwhile, calls to privatize the USPS are being heard from mainstream outlets and on the Right. Bloomberg recently published a piece on the subject from Peter Orszag. Much on the Right issues from the American Enterprise Institute (AEI)and a group called the Institute for Research on the Economics of Taxation (IRET), which is funded by the Scaife Foundation, the Carthage Foundation, and the Charles G. Koch Foundation.
It’s hard, in this pass, not to wonder if the Right Wing is forcing the issue by creating a crisis, then pressing for action. This, after all, has been its strategy for shrinking the Federal Government — systematically starve it for money by cutting taxes and larding it with debt, then call for drastic reforms to stave off disaster, a la the Ryan Plan.
There’s even what amounts to a business plan for privatizing the USPS, published by the AEI in 2011, called “Return to Sender: Reforms for the Failing Postal Service.” The premise: The USPS is obsolete and doomed, and the taxpayers’ interests have to be protected by getting it off the government’s books as soon as possible.
Written by a Cornell University associate professor named R. Richard Geddes (Mr. Geddes also writes for the Hudson and Cato Institutes), it lays out a step-by-step outline for moving from today’s government agency to, eventually, a public, stock-based corporation. It’s all based on the idea that if the USPS was a private company, it could survive and even prosper in the world of e-mail. In fairness, Mr. Geddes does observe that many of the USPS’s problems were created by the 2006 law.
But the idea raises a question: If Geddes and the AEI are correct and the USPS is such a bottomless money pit, why would anybody want it? Who ever heard of buying a service company with no upside? What’s in it for them?
Well, real estate, actually, and Geddes and every commenter hints at this. Privatizing the USPS has the potential of being one of history’s biggest — and most profitable — real estate deals ever.
Here’s how it could work.
When the USPS became a private, investor-owned corporation, it would be split into two entities, an operating company that handles mail and packages, and a separate company that owns the real estate. The share prices paid by investors would probably reflect the company’s discounted revenues — not the value of the real estate.
The real estate company would then sponsor a series of vehicles — real estate investment trusts, probably, or even limited partnerships — each appealing to a specific subset of investors.
These in turn would lease some of those properties back to the USPS, and lease or sell others. That first would increase the operating expenses of the USPS, but also reduce its taxes, since leases are tax deductible. It would be billed as a way to subsidize the operating company, preserving universal mail delivery, jobs, and benefits. The unions would love it.
Then the real estate companies would take the cash flow from the USPS lease payments, and the other lease payments, and turn it into bonds.
Since the leases would be on commercial real estate, the income would be sheltered from taxes for years, because as commercial property, it could be depreciated. When the bonds matured, the company could lease the properties all over again, or sell them. The properties not treated this way would either be sold, re-developed, or re-developed and then sold.
How big would this deal be? Well, the USPS leases 24,671 square feet of space — mostly small rural post offices — and that property wouldn’t be affected. But it also owns 8,621 properties (totaling about 318 million square feet of interior space), and about 500 acres of vacant land.
Most of that owned real estate is prime, downtown real estate in every town and city in America — the main Post Office and the neighborhood branches in cities, suburban branches, and big operations centers. The land is scattered all over the country, but pretty much none of it is in wilderness areas.
How much is it worth? Nobody really knows. The USPS, like every government entity, doesn’t regularly appraise its properties. But there is an estimate nosed about by the Right; the IRET reported in a 2003 paper that the USPS carried its properties on its books at $15 billion, and that in 1999, it reported that properties it sold went for about seven times book value.
So by the Right Wing’s estimates, the owned USPS property portfolio is worth about $105 billion.
A deal like that is too big to be done all at once; it would flood the market and undercut itself. It would have to be done slowly, quietly, and under the radar — hopefully so no one notices. If, as business prospects for the USPS fell, it eventually collapsed — well, the organizers could always say the USPS was a sinking ship, and it sank.
But the real estate company wouldn’t sink. And the deal could be used as a template for other privatizations — your local Board of Education, for instance
Unless, that is, the Congressional oversight committee let the USPS do it itself. In that case, it would probably never have to worry about money again.
One thing we know about ONE WORLD ONE GOVERNANCE ----all that public-private partnership policy has WE THE TAXPAYER subsidizing all that is global corporate campus. This is literally government owned by global corporations. They own the real estate and control operations and taxpayers pay the costs of doing business. This will be the next stage towards actually ending our USPS-----and guess what that step will be----TURNING OUR POST OFFICES INTO BANKS AND PRETENDING THIS IS A GOOD THING FOR CITIZENS AND SAVING OUR USPS.
'The postal operator Japan Post will remain under the group’s umbrella even after the financial units are fully privatized. But its postal services struggle to make a profit, and the firm manages to be in the black thanks largely to nearly ¥1 trillion in annual revenue from the two financial units, which pay the commission fees for running the counter services for the banking and insurance operations at post offices'.
Here we see where JAPAN has already done what global Wall Street CLINTON/OBAMA neo-liberals are now trying to pedal here in the US as SAVING OUR POST OFFICE-----by installing banks. We shouted back in 2010 this was just another agency to be tied to Wall Street---as our Federal Housing Agency FHA-----our Federal Student Loan Agency -----REMEMBER FANNIE AND FREDDIE AND SALLIE MAE----the very vehicles for these few decades of massive frauds against our Federal agencies. This is the goal for our Post Offices---imploding USPS with Wall Street fraud, corruption, and sending it into bankruptcy from all the debt created by looting all the assets-----
Who is championing this SAVE THE POST OFFICE BY MAKING THEM BANKS? Of course social progressive poser ELIZABETH WARREN the farm team Clinton Wall Street global corporate neo-liberal---and yes----Bernie Sanders. Remember we are not sheep and Bernie did support a few NEO-LIBERAL POLICIES like this one.
Japan Post’s murky privatization
- Oct 30, 2015
Currently, the government wholly owns all shares of Japan Post Holdings, which in turn holds 100 percent of Japan Post Bank Co., Japan Post Insurance Co. and Japan Post Co. On Nov. 4, 11 percent of the shares in the holding company, Japan Post Bank and Japan Post Insurance will go on sale. The government plans to sell the shares in Japan Post Holdings in several batches until its stake falls to around a third of the total, while Japan Post Holdings will sell its shares in the two financial units and reduce its ownership to about 50 percent. Japan Post, the mail and parcel delivery service, will not go public. The shares in Japan Post Holdings, Japan Post Bank and Japan Post Insurance will be offered at ¥1,400, ¥1,450 and ¥2,200 per share, respectively. The total market capitalization of the three firms will reach ¥13.56 trillion, the biggest since NTT Corp.’s ¥24.96 trillion at its debut price when it went public in 1987.
The Japan Post group boasts a network of 24,000 post offices nationwide, with the combined assets of the group firms reaching ¥300 trillion. Japan Post Bank, operator of the former yucho postal savings system, is the nation’s largest financial institution, with outstanding deposits of ¥177 trillion at the end of March topping those of any of the mega-banks.
Despite the gigantic size of its operations, however, doubts linger over the profitability and future business prospects of Japan Post group firms. Now that they are going public, the government and the group firms need to come up with medium- to longer-term plans, including a road map for full privatization of the group.
The scheme to privatize postal services began in 2005, when the administration of Prime Minister Junichiro Koizumi passed relevant laws through the Diet. Koizumi’s initial scheme dictated that Japan Post Holdings will sell off all of its shares in the two financial units by the end of September 2017. However, an amendment to the postal privatization law, enacted under the Democratic Party of Japan-led government that included privatization foes as a coalition partner, lifted the deadline to say only that the shares in the financial units should be disposed of “as early as possible.”
The murky path toward full privatization keeps the business operations of the group firms in fetters. As long as the government keeps control via its stake in Japan Post Holdings, the two financial units will be deemed effectively government-backed, and because of this advantage over other financial institutions in terms of their creditworthiness, tight restrictions on the scope of their business dating back to their days as state-run operations remain.
The Japan Post Bank behemoth, for example, suffers from low profitability of its operations, and remains unable to start offering new services such as housing loans and lending to corporate customers. Recent calls by Liberal Democratic Party lawmakers to raise the upper limit on deposits for each Japan Post Bank account have met with strong objections from private-sector financial institutions on the grounds that the bank, in which the government will continue to indirectly hold a substantial stake, does not stand on an equal competitive footing.
Even if the financial units are to be fully privatized in the future, lack of experience in a variety of financial services cloud their prospects for survival in a competitive environment. Japan Post Bank today invests much of its funds in government bonds, and whether it has the manpower and know-how to diversify into more risky but higher-return investments remains unclear.
The postal operator Japan Post will remain under the group’s umbrella even after the financial units are fully privatized. But its postal services struggle to make a profit, and the firm manages to be in the black thanks largely to nearly ¥1 trillion in annual revenue from the two financial units, which pay the commission fees for running the counter services for the banking and insurance operations at post offices.
The government expects to use roughly ¥4 trillion from the sale of Japan Post Holdings shares to finance reconstruction of areas devastated by the 2011 Great East Japan Earthquake. To maintain and increase the value of the Japan Post group firms after the listing, it is all the more imperative for the government and the holding company to take steps that improve the future prospects of the group firms, including clarification of the path toward full privatization of the financial units.
It will be this POST OFFICE AS BANK that sets the stage for bringing down our USPS with the same kinds of looting of Federal funding and assets ----as was done in our other Federal agencies. Loading USPS with Wall Street frauds and corruptions guts all assets and then USPS is thrown into bankruptcy with Congressional far-wing pols shouting ------
LOOK AT ALL THOSE DEFICITS THE USPS CANNOT MAINTAIN A POSITIVE BUDGET!
A central bank for the poor-----OMG. Baby boomers will remember we heard these same social progressive voices for bringing Wall Street into our FHA----our Student Loans-----it will allow more poor to access housing and higher education ------as Wall Street players filled these agencies with frauds and corruption
'The push for postal banking received a boost this month with an article by Mehrsa Baradaran in The Atlantic. Baradaran, a University of Georgia School of Law associate professor, advocates a “central bank for the poor,” as an alternative to “the unscrupulous practices of payday lenders.”'
Should the post office also be a bank?
By Joe Davidson | Columnist October 30, 2015 After college, Sally Frank, of Dallas, fell on hard financial times.
To help meet her hefty student loan payments and other bills, she cut costs by sharing a two-bedroom apartment with three people and picked up extra work whenever she could.
Neon signs illuminate a payday loan business in Phoenix on Tuesday, April 6, 2010, one of 650 operating in the state with some open 24-hours a day. A growing backlash against payday lending practices have prompted legislatures around the country to crack down on the businesses. (AP Photo/Ross D. Franklin)“But it still wasn’t enough,” she said. “Eventually there came a time when I was so far behind that I didn’t have money for rent… I took out a payday loan to cover the rent and then I was really in deep water. I ended up having to take out two more loans over the next two months to cover that first loan….The loan was $150. I ended up paying over $2,000 to the payday lending industry over the next 4 months.”
Gordon Martinez in Richardson, Texas also turned to payday loans after some admittedly irresponsible financial behavior left him in the red. A musician, he used his prize possession, a tuba worth $8,000, as collateral to borrow $500 from a payday lender.
Over two years, he said he paid back $3,700. But he still lost the tuba.
“Never would I consider using (financial) products like this again,” he said.
Frank and Martinez might be through with payday loans, but plenty of other people aren’t. If there were more alternatives in neighborhoods lacking banks, payday customers might not be driven to lenders with a reputation for exploiting borrowers with high-interest loans that roll over and over and over.
Cue postal banking.
Postal unions and civil rights groups are among other advocacy organizations, along with the U.S. Postal Service inspector general, pushing USPS to expand into banking. Sen. Bernie Sanders (I-Vt.), a Democratic presidential hopeful, agrees. But USPS, which could use the business, has no interest.
Providing financial services in post offices “could benefit the 68 million underserved Americans who either do not have a bank account or rely on expensive services like payday lending and check cashing,” says an inspector general report issued in May. “The products also could help the Postal Service generate new revenue to continue providing universal service. Because it has a presence in every neighborhood, including many places where there are no longer any bank branches, the Postal Service is well suited to provide such services. In addition, its well-trained workforce is already experienced at handling complex transactions and watching out for related fraud and other risks.”
The push for postal banking received a boost this month with an article by Mehrsa Baradaran in The Atlantic. Baradaran, a University of Georgia School of Law associate professor, advocates a “central bank for the poor,” as an alternative to “the unscrupulous practices of payday lenders.”
Postal banking, she wrote, could provide short-term loans and “potentially drive out the usurious fringe-lending sector, which profits from Americans’ financial woes.” Her article was adapted from her book “How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy.”
USPS officials regularly trumpet what they are doing to improve the Postal Service’s financial situation, including such things as selling greeting cards. But the officials have rejected postal banking.
“While we currently provide our customers with certain financial services, including money orders, electronic funds transfers, and cashing of U.S. Treasury checks, our core function is not banking,” said David A. Partenheimer, a USPS spokesman. Former Postmaster General Patrick Donahoe was more emphatic during his farewell press conference in January. “The key thing for any successful business is to work within their core,” he said. “We don’t know anything about banking.”
They must have forgotten.
Postal banking, known as the Postal Savings System, began operation in 1911 and officially ended in 1967, though the Post Office stopped accepting deposits a year earlier. Initially, savings earned 2.5 percent interest with a half-percent designated for operation of the system, according to a postal service history. “Although bankers first viewed the Postal Savings System as competition,” the history says, “they later were convinced that the Postal Savings System brought a considerable amount of money out of hiding from mattresses and cookie jars.” Most of the money was redeposited in local banks. The Postal Savings System, however, did not include lending, according to Mehrsa.
Meanwhile, a coalition of civil rights organizations are fighting two of President Obama’s nominees to the USPS Board of Governors, one of whom has ties to the payday industry. A letter from The Leadership Conference on Civil and Human Rights to the Senate leadership says “given the harmful effects of payday lending on the communities we represent, and given the value of and need for a vibrant, public Postal Service that provides affordable, universal mail service to all – including rich and poor, rural and urban, without regard to age, nationality, race, or gender – we are especially troubled by the nominations of Mickey D. Barnett, who has previously worked as a lobbyist for the payday lending industry, and of James C. Miller, III, who dating back at least to his tenure as director of the U.S. Office of Management and Budget (OMB) from 1985-88, has strongly supported privatizing the Postal Service.”
Miller said while he continues to believe “the voters, consumers, and, yes, employees would benefit if postal services were privatized, in view of overwhelming opposition to privatization in Congress I have stated it would be futile for me to expend any efforts in this direction. Instead, as I did while in my previous service on the Board, I intend to help make the U.S. Postal Service an efficient business enterprise — one that serves the public well without becoming a ward of the state.”
Barnett did not reply to a request for comment.
The payday industry, represented by The Community Financial Services Association of America, did have something to say. An association statement said “we welcome increased competition in the short-term credit marketplace,” but not from the Postal Service. “The private sector remains the best opportunity for serving small dollar, short-term loans.”
Sally Frank and Gordon Martinez might differ with that.
And here inside this same article by a Washington Post now owned by global BEZO AMAZON.COM-----our FEELING THE BERN------who abandoned the Democratic primary saying he would contest but failing to do so. Indeed-----this is how a Clinton neo-liberal looked left social progressive in the 1990s. We appreciated Bernie Sanders for pushing a social Democratic platform but he has returned to being an establishment pol and is backing Clinton/Obama neo-liberals and policies----please do not simply follow---think to where these BANKS IN POST OFFICES policies lead.
When Clinton neo-liberals deregulated our banking system they broadened the structures of CREDIT UNIONS telling us that was how we the people would have a bank for our own needs. Know what this coming economic crash from massive US Treasury and state municipal bond market fraud will do to credit unions? Community banks and credit unions are slated to be sent into bankruptcy as global Wall Street pols pretend to be saving TOO BIG TO FAIL WALL STREET BANKS.
Please do not fall for this simply because a BERNIE SANDERS supports it---he knows to where this is going!
THE US HAD A STRONGLY REGULATED BANKING SYSTEM BACK THEN---NOT A COMPLETELY DEREGULATED CRIMINAL BANKING SYSTEM WE HAVE TODAY
'Americans don't spend nearly as much time at post offices as they used to, but that's not only because postcards are being replaced by Evites. For more than half a century, from 1911 until 1967, the Postal Service also served as a bank. Customers could walk down the street to the post office with their money and deposit it in a savings account there'.
Bernie Sanders has a pretty revolutionary idea to change America’s post offices
By Max Ehrenfreund October 29, 2015
Sen. Bernie Sanders (I-Vt.) believes the Postal Service should once again offer basic banking. (Marcus Yam / The Washington Post)Americans don't spend nearly as much time at post offices as they used to, but that's not only because postcards are being replaced by Evites. For more than half a century, from 1911 until 1967, the Postal Service also served as a bank. Customers could walk down the street to the post office with their money and deposit it in a savings account there.
The system made sense back in those days, when the country was more sparsely populated and banks were harder to find, but post offices were everywhere. Over the past 50 years, though, the total number of bank branches in the United States increased from 16,000 to 83,000. What's more, people visit the bank less frequently these days, given the ubiquity of credit cards and direct deposit.
Still, there are still relatively few banks in many impoverished urban and rural neighborhoods, and Sen. Bernie Sanders (I-Vt.), a candidate for the Democratic presidential nomination, has a big idea for turning post offices back into banks. That's because he sees them as a place where the 68 million low-income Americans who currently rely on payday lenders and costly cash checking services could manage their affairs less expensively. (And banking might help the beleaguered Postal Service's bottom line as well.)
"What people are forced to do is go to payday lenders who charge outrageously high interest rates. You go to check-cashing places, which rip you off," Sanders said recently. "And, yes, I think that the Postal Service, in fact, can play an important role in providing modest types of banking service to folks who need it."
Postal banking is still a part of everyday life in many foreign countries, including the United Kingdom and France, and the U.S. postal inspector general issued a report endorsing the idea last year. The report argued the Postal Service should consider not only opening savings accounts again, but also expanding into short-term loans and debit cards as well.
Bricks and mortar
The inspector general also noted several reasons why the Postal Service might be able to help those on the margins of the American economy bank more cheaply. Start with payday lenders, whom Sanders and other proponents see as the villains in the dark tale of unconventional financial services.
Maintaining a large volume of customers at each storefront is crucial for payday lending, according to a study of the industry published by the Federal Deposit Insurance Corporation. With more customers, lenders are able to defray the costs of keeping the lights on through lower interest rates. The most profitable payday lending branches have been open for a while and have established a base of customers in the neighborhood. The study found that on average, payday lending firms earn about nine cents on every dollar they loan.
The Postal Service already has locations all over the country, though, and everyone who walks in to buy stamps is a potential customer.
Another advantage is less tangible than bricks and mortar: trust, an invaluable resource for any financial institution. The Postal Service rates highly among government agencies in public opinion polls.
Perhaps above all, the Postal Service is an agency of the federal government. If borrowers failed to repay loans, the Treasury Department could seize their tax refunds at the end of the year, allowing post offices to limit their losses and offer more favorable interest rates than payday lenders.
Those seizures would be part of another, more dour aspect of postal banking.
People have neighborly feelings about their local post office, and proponents argue that postal banking could protect the public from loan sharks. Yet as the inspector general's report makes clear, going to the Postal Service wouldn't exactly be like borrowing $20 from your grandma. In a hypothetical example considered in that report, the Postal Service offers loans at no less than 25 percent interest and seizes borrowers' money come April 15 if they don't pay up.
The inspector general argues that 25 percent interest is still far cheaper than the fees charged by payday lenders, typically equivalent to 400 percent at an annual rate or even more. It's hard to know whether Treasury's strong arm, combined with the Postal Service's existing infrastructure, could reduce costs enough to offer customers even that rate.
One way the Postal Service could control costs would be by lending only to borrowers who have a good chance of repaying, said Mehrsa Baradaran, a legal scholar at the University of Georgia who has long advocated for postal banking.
She said that if the Postal Service begins lending money to Americans, the program shouldn't depend on funding from taxpayers to remain solvent.
"We've got to honor market principles," Baradaran said. "We're not going to offer a subsidy here."
Some economists worry that because every borrower is potentially a voter as well, any public agency lending money will hesitate to deny loans for political reasons.
"We will always have higher rates of default here, because we don't have investors with their money at stake," said Robert DeYoung, an economist at the University of Kansas.
In any case, if the Postal Service were to underwrite loans, it wouldn't really be competing with payday lenders at all. Underwriting takes time. Many people patronize payday establishments because they need cash immediately, said Eva Wolkowitz, an associate at the Center for Financial Services Innovation, which studies financial products.
Instead, the postal loans (at least as described by the inspector general) would be more akin to installment loans -- another, more obscure type of short-term loan. Unlike a payday loan, installment loans are paid back in several increments, rather than in a lump sum. While there is a wide range of interest rates on installment loans, they generally cost less than payday loans.
The senator from Vermont is Hillary Clinton’s rival in the contest for the Democratic presidential nomination.
Pawnshops and more
Besides installment and payday loans, there are all kinds of alternative credit available, which is another limitation of postal banking. For the most part, postal loans wouldn't offer consumers a real alternative to these other forms of credit.
Wolkowitz and her colleagues have estimated that Americans spent $103 billion on alternative financial services in 2013. Yet only about $15 billion of that amount was spent on the forms of credit comparable to the proposed postal loans. You can see the distribution of these loans in the chart below.
"I don't think the post office would go into the business of operating a pawnshop or loaning out vehicles," Wolkowitz said.
Payments and savings
Much of retail banking has nothing to do with lending, though, and post offices could offer some of those other services.
The Postal Service could take advantage of existing networks established by other post offices abroad to help immigrants wire money cheaply to relatives at home. The agency could offer savings accounts, as it did in the past, along with basic debit cards to help customers manage their money safely and cheaply.
There would be competition, though. The basic debit cards known in the industry as reloadable prepaid cards are quickly becoming popular. Many of them allow customers to cash their paychecks without a fee and offer protection from overdraft charges. The cards are issued by major banks and retailers. Some charge nominal monthly fees. Others, such as the Bluebird card issued by Wal-Mart and American Express, don't.
If any entity can match the Postal Service for bricks and mortar, it's likely Wal-Mart. And Mike Moebs, the founder of the economic research firm Moebs Services in Lake Forest, Ill., asked whether the Postal Service had the technological know-how to administer the cards effectively.
"They're still dealing with paper," he said.
A public institution
The debate about postal banking raises big questions. Some people probably doubt that the Postal Service can offer financial services more efficiently and cheaply than the private sectors. Others might feel that the government should ensure that everyone can take part in the modern economy, and that without savings accounts and debit cards, you really can't.
Emperors and kings have minted coins for millennia, recognizing the benefits of a neutral, reliable and widely available mode of payment. Maybe it's the responsibility of the U.S. government today to issue inexpensive plastic money alongside hard currency.
"Sure, we can outsource the needs of the poor to Wal-Mart," said Baradaran of the University of Georgia. "I'd rather see the post office get this revenue."
Revenue is one reason the American Postal Workers Union has advocated for the idea in contract negotiations with the federal government. At the same time, Mark Dimondstein, the union's president, argued that the post office has been an important part of civic life in American towns for centuries, and postal banking would help sustain that tradition.
"The post office will be fulfilling its mission, in an ever deeper way, of binding the people together," he said. Postal banking "just makes the entire public institution that much more vibrant and that much more vital."
If we look at the history of this idea of Post Office as bank we are taken back to the Robber Baron era of early 1900s------when this idea was first installed. As we see below the concerns are as today-----the structures were geared as a mechanism to send those postal savings into the commercial banking sector to save those private banks. As well, although policy was installed to supposedly keep rural post office savings revenue in those localities-----as was feared-----those rural area assets found their way into US cities to bail out those commercial banks.
THERE WAS NO UP SIDE TO HAVING BANKS IN POST OFFICES FOR CITIZENS OTHER THAN THE FACT A CENTURY AGO THEY DID NOT HAVE THE COMMERCIAL BANK BRANCHES ACROSS THE US---
'In theory, the postal savings system would have the capacity to stop bank runs through redepositing. As depositors transfer savings from commercial banks to postal banks, the postal savings system could redistribute the new deposits back to the local banks. Even if a commercial bank were hit by a wave of withdrawals, the postal savings system could stymie a potential run by redepositing its funds into the threatened bank, serving as a backstop to the banking system by slowing the vicious cycle between deposit withdrawals and bank failures'.
It basically moved rural America savings to US city commercial banks at the time Robber Barons and their pols were planning the same Wall Street frauds during the 1920s----bringing that economic crash in 1929 of course taking all those post office savings.
Global Wall Street players for the 1% and their 2% using these same banking policy schemes today as was used a century ago all meant to take the wealth of WE THE PEOPLE.
The Influence of the U.S. Postal Savings System on Bank Runs
AuthorDavid HuSchoolYaleArticle issue
Fall 2013 Vol. 2 Iss. 1
Until the creation of the Federal Deposit Insurance Corporation (FDIC) in 1935, the U.S. postal savings system was the only bank to have its deposits fully insured by the federal government. Given that the U.S. experienced widespread bank runs throughout the 1920s and 1930s, culminating in the Great Depression, it is important to understand how the existence of postal banks may have played a role in altering depositor behavior and preventing bank failures.
The existing literature on the postal savings system is limited but has generally pointed to two conclusions. First, in response to a bank failure, individuals move their savings to the postal bank (Kuwayama 2000; Sissman 1936). Second, the postal savings system failed to limit the bank runs of the Great Depression since it did not redeposit its holdings (Friedman and Schwartz 1963; O’Hara and Easley 1979). However, most of the previous research relies on historical accounts and stylized statistics rather than econometric models. In this paper, I attempt to address this gap in the literature by gathering the first county level dataset on postal savings and the first state-level dataset on redeposits from 1911 to 1945. By constructing these datasets, I am able to perform a detailed statistical analysis of the postal savings system.
I find that previous research has not adequately addressed endogeneity issues in the relationship between postal deposits and bank failures. Using fixed effects, I reveal a negative correlation between the two variables. Through an instrumental variables approach structured around the rules in the Postal Depository Act of 1940, I also obtain evidence that the postal savings system had a statistically significant effect on bank runs during the 1920s and 1930s. Lastly, I find that the effects of bank failures on the demand for postal deposits are highly localized. All three conclusions contradict previous results in the postal bank literature.
The paper proceeds in seven sections. Section 2 provides historical background on the postal savings system’s development and highlights its unique institutional features, which are employed in the instrumental variables strategy later on. Section 3 uses previous research to motivate the questions under consideration. Section 4 describes the panel datasets on postal deposits, redeposits, and bank failures. Section 5 outlines an empirical strategy using instrumental variables to analyze the relationship between bank failures and postal deposits as well as the relationship between redeposits and bank failures. Section 6 presents the regression results, and Section 7 offers some conclusions.
2 Historical Background
2.1 The Founding of the Postal Savings System
During the late 19th century, many European countries successfully developed postal savings systems as a way to increase household savings (Schewe 1971). In contrast, the United States was a relatively late adopter. Commercial bankers perceived the postal savings system as a competitive threat, claiming that it could eventually lead to a government takeover of the entire financial sector. It was only after the Panic of 1907 that public support for the postal savings system overcame private sector resistance. The panic left lawmakers to figure out how to restore public confidence in banks and credibility to the financial system. Congress chose to pass the Postal Savings Depository Act of 1910, which authorized the conversion of post offices into government- backed banks where all deposits would be fully insured by the government.
2.2 Institutional Features of the Postal Bank
In response to the bank lobby’s concerns, the postal savings system was designed with several unique institutional features to limit its competition with private banks and ensure that the deposits would remain local. The interest rate on postal deposits was fixed at 2%, significantly less than the 3.5% paid out by most commercial banks in 1910 (O’Hara and Easley 1979). A strict deposit limit of $500 was imposed, later raised to $2,500 in 1918, so the government could argue that the postal bank’s deposits were from poor, rural savers and would not have been placed in private banks anyways.
The Postal Depository Act ordered the conversion of post offices to banks to proceed from first-class post offices, or those with the highest gross annual revenue, to fourth-class offices. Emphasis was placed on keeping higher classification postal banks open over the years; fourth-class postal banks were most likely to be closed in the event of a downturn.
2.3 Redepositing Mechanism
A second major fear was that the system would redeposit its money in large, urban financial markets, depriving the local areas where the savings were generated of investment funds. To avoid this possibility, the Postal Savings Depository Act stated that 95% of postal deposits were to be redeposited in solvent local banks. Only when no local banks were willing to pay the legally required interest rate of 2.25% could the deposits be offered to other banks within the same state or, eventually, placed in federal government securities.
In theory, the postal savings system would have the capacity to stop bank runs through redepositing. As depositors transfer savings from commercial banks to postal banks, the postal savings system could redistribute the new deposits back to the local banks. Even if a commercial bank were hit by a wave of withdrawals, the postal savings system could stymie a potential run by redepositing its funds into the threatened bank, serving as a backstop to the banking system by slowing the vicious cycle between deposit withdrawals and bank failures.
As this article shows the plan to kill our USPS by reinstalling BANKS IN POST OFFICES-----is tied to the fact that all those small community banks and credit unions will see consumers having THEIR BANK ACCOUNTS confiscated and those banks sent into bankruptcy-----those include INTERNATIONAL LABOR UNION CREDIT UNIONS-----and state employee credit unions like MECU and SECU-----it is planned---it is deliberate and know who has there savings in these credit union banks more than any? The middle-working class and poor.
Who would have their money in POST OFFICES AS BANK? The middle-working class and poor with all those savings planned to be moved to commercial banks in bailouts.
NATIONAL LEADERS PROMOTING POST OFFICES AS BANKS KNOWS THIS!
'It will bankrupt all the small banks that had to contribute to this premium. They will say we’re raising your premium to everything you got, basically. Little banks will go out of business, and who is going to survive–the big banks. . . . What we’re going to have left is five big banks, and everybody else is going to be bankrupt.”'
Big Banks Will Take Depositors Money In Next Crash -Ellen Brown
By Greg Hunter On December 10, 2014 In Market AnalysisBy Greg Hunter’s USAWatchdog.com
The G-20 met recently in Australia to make new banking rules for the next financial calamity. Financial reform advocate Ellen Brown says these new rules will allow banks to take money from depositors and pensioners globally. Brown explains, “It became rules we agreed to actually implement. There was no treaty, and Congress didn’t agree to all this. They use words so that it’s not obvious to tell what they have done, but what they did was say, basically, that we, the governments, are no longer going to be responsible for bailing out the big banks. These are about 30 international banks. So, you are going to have to save yourselves, and the way you are going to have to do it is by bailing in the money of your creditors. The largest class of creditors of any bank is the depositors.”
It gets worse, as Brown goes on to say, “Theoretically, we are protected by deposit insurance up to $250,000 in the U.S. and 100,000 euros in Europe. The FDIC fund has $46 billion, the last time I looked, to cover $4.5 trillion worth of deposits. There is also $280 trillion worth of derivatives that the five biggest banks in the U.S. are exposed to, and under the bankruptcy reform act of 2005, derivatives go first. So, they are basically exempt from these new rules. They just snatch the collateral. So, if you had a big derivatives bust that brought down JP Morgan or Bank of America, there is no way there is going to be collateral left for the FDIC or for the secured depositors. This would include state and local governments. They all put their money in these big banks. So, even though we are protected by the FDIC, the FDIC is not going to have the money. . . . This makes it legal for these big 30 banks to take our money when they become insolvent. They are too-big-to-fail. This was supposed to avoid too-big-to-fail, but what it does is institutionalizes too-big-to-fail. They are not going to go down. They are going to take our money instead.”
Part of the coming financial calamity will involve hundreds of trillions of dollars in un-backed derivatives. Brown contends, “If the derivative bubble pops, nobody knows what is going to happen, and it’s obvious it has to pop. It can’t just keep growing. Depending on who you read, some people say it is up to two quadrillion dollars. It’s virtual money, and it cannot keep going on.”
When a financial crash does happen, you can forget about getting immediate access to your money. Brown says, “The banks will say, well, we don’t have it. All the money goes into one big pool since Glass Steagall was repealed. They are allowed to gamble with that money and that’s what they do. I think maybe Bank of America is the most vulnerable because of Merrill Lynch. Everybody is concerned, and they do very risky deals and they are on the edge. I think they have over $50 trillion in derivatives and over $1 trillion in deposits. . . The Dodd-Frank Act says we, the people, are no longer going to be responsible for the big banks when they collapse. It is not clear the FDIC will even be able to borrow from the Treasury, but even if they could, who is going to pay that money back? Let’s say they borrowed $1 trillion. Who is going to pay that $1 trillion back? It will bankrupt all the small banks that had to contribute to this premium. They will say we’re raising your premium to everything you got, basically. Little banks will go out of business, and who is going to survive–the big banks. . . . What we’re going to have left is five big banks, and everybody else is going to be bankrupt.”