This is the Cato Daily Podcast for Friday, November 6, 2020.

I'm Caleb Brown.

It's not exactly clear if giving the Postal Service the ability to engage in retail banking

is an idea meant to help rural and low-income Americans or just

give the Postal Service some quick cash.

The idea is far from dead in the water, but those questions remain about just who would be helped by so-called

postal banking. Diego Zulawaga comments.

Postal banking as it is understood today would involve the US Postal Service offering directly bank accounts to its customers.

And these would be checking accounts in the same way that you can open a basic checking account at a bank branch today.

Some proposals such as legislation that Senator Gillibrand from New York introduced first in 2018

and then in this Congress as well, would also enable the USPS to make small dollar loans at a very low rate of interest and I have my doubts that that kind of interest rate is commercially viable So it would probably involve subsidizing it. But at the least,

proposals for postal banking involve USPS offering directly checking accounts to people.

You and I have our priors about the notion of effectively a federal agency issuing credit

and making determinations about approving this loan versus that loan.

But there is some controversy over that among the people who are advocating for postal banking.

So what is the controversy over whether or not a

postal banking system ought to be one in which credit is extended to people?

Well the USPS has a history of providing some accounts in the past

between 1910 and 1966 they offered what were called then postal savings

accounts based on the idea of savings bonds and money orders.

And the experience there was, I think mixed, I don't think the learnings have really transpired into recent times but at least there is some historical experience of that

And it had to do with immigrants coming from countries that had postal banks and which would send money abroad at the time through the post office.

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