What We Could Do with a Postal Savings Bank: Infrastructure that Doesn’t Cost Taxpayers a Dime

The U.S. Postal Service (USPS) is the nation’s second largest civilian employer after WalMart. Although successfully self-funded throughout its long history, it is currently struggling to stay afloat. This is not, as sometimes asserted, because it has been made obsolete by the Internet. In fact the post office has gotten more business from Internet orders than it has lost to electronic email. What has pushed the USPS into insolvency is an oppressive 2006 congressional mandate that it prefund healthcare for its workers 75 years into the future. No other entity, public or private, has the burden of funding multiple generations of employees who have not yet even been born.

The Carper-Coburn bill (S. 1486) is the subject of congressional hearings this week. It threatens to make the situation worse, by eliminating Saturday mail service and door-to-door delivery and laying off more than 100,000 workers over several years.

The Postal Service Modernization Bills brought by Peter DeFazio and Bernie Sanders, on the other hand, would allow the post office to recapitalize itself by diversifying its range of services to meet unmet public needs.

Needs that the post office might diversify into include (1) funding the rebuilding of our crumbling national infrastructure; (2) servicing the massive market of the “unbanked” and “underbanked” who lack access to basic banking services; and (3) providing a safe place to save our money, in the face of Wall Street’s new “bail in” policies for confiscating depositor funds. All these needs could be met at a stroke by some simple legislation authorizing the post office to revive the banking services it efficiently performed in the past.

Funding Infrastructure Tax-free

In a July 2013 article titled “Delivering A National Infrastructure Bank . . . through the Post Office,” Frederic V. Rolando, president of the National Association of Letter Carriers, addressed the woeful state of US infrastructure. He noted that the idea of forming a national infrastructure bank (NIB) has had bipartisan congressional support over the past six years, with senators from both parties introducing bills for such a bank:

An NIB would provide a means to channel public funds into regional and national projects identified by political and community leaders across the country to keep the economy healthy. It could issue bonds, back public-private partnerships and guarantee long-term, low-interest loans to states and investment groups willing to rebuild our schools, hospitals, airports and energy grids. An NIB with $10 billion in capital could leverage hundreds of billions in investments.

What has blocked these bills is opposition to using tax money for the purpose. But Rolando asks:

[W]hat if we set up the NIB without using taxpayer funds? What if we allowed Americans to open savings accounts in the nation’s post offices and directed those funds into national infrastructure bonds that would earn interest for depositors and fund job-creating projects to replace and modernize our crumbling infrastructure?

A post office bank . . . would not offer commercial loans or mortgages. But it could serve the unbanked and fund infrastructure projects selected by a non-partisan NIB.

The Unbanked and Underbanked: A Massive Untapped Market

The “unbanked” are not a small segment of the population. In a 2011 survey, the unbanked and underbanked included about one in four households.  Without access to conventional financial services, people turn to an expensive alternative banking market of bill-pay, prepaid debit cards, check cashing services, and payday loans.  They pay excessive fees and are susceptible to high-cost predatory lenders.

Globally, postal banks are major contributors to financial inclusion. Catering to this underserved population is a revenue-generator for the post office while saving the underbanked large sums in fees. Worldwide, according to the Universal Postal Union, 1 billion people now use the postal sector for savings and deposit accounts, and more than 1.5 billion take advantage of basic transactional services through the post. According to a Discussion Paper of the United Nations Department of Economic and Social Affairs:

The essential characteristic distinguishing postal financial services from the private banking sector is the obligation and capacity of the postal system to serve the entire spectrum of the national population, unlike conventional private banks which allocate their institutional resources to service the sectors of the population they deem most profitable.

Expanding to include postal financial services has been crucial in many countries to maintaining the profitability of their postal network.  Maintaining post offices in some rural or low-income areas can be a losing proposition, so the postal service often cross-subsidizes with other activities to maintain its universal network.  Public postal banks are profitable because their market is large and their costs are low.  The infrastructure is already built and available, advertising costs are minimal, and government-owned banks do not reward their management with extravagant bonuses or commissions that drain profits away.  Profits return to the government and the people.

Wall Street Is No Longer a Safe Place to Keep Our Money

A postal bank could have appeal not just to the unbanked but to savers generally who are concerned about the safety of their deposits. Traditionally, people have deposited their money in banks for three reasons: safety from theft, the convenience of check writing and bill paying, and to earn some interest. Today, not only do our bank deposits earn virtually no interest, but they are not safe from theft – and the prospective thief is Wall Street itself.

The Financial Stability Board (FSB) in Switzerland has mandated that “systemically important” banks come up with “living wills” stating what they would do in the event of insolvency. The template set out by the FSB is for these too-big-to-fail banks to confiscate their creditors’ funds and convert them to bank equity or stock. Legally, “creditors” include the depositors. In fact depositors compose the largest class of creditors of any bank.

In 2009, President Obama agreed along with other G20 leaders to be bound by the regulations imposed by the FSB, giving them the force of law. This agreement should properly have been a treaty, subject to the approval of two-thirds of the Senate; but the deal was sealed on a handshake, ostensibly to prevent another Lehman-style banking collapse. Thus the next time JPMorganChase or Bank of America finds itself on the wrong side of a massive derivatives bet, it can avoid insolvency by recapitalizing itself with our deposits. Both JPM and BOA hold over $1 trillion in deposits and over $70 trillion in derivatives; and with the repeal of Glass-Steagall, the banks have been able to merge these operations. The FDIC deposit insurance fund has only $32 billion in it to cover losses for the entire country.

For guaranteed safety, we need a network of publicly-owned banks devoted solely to taking deposits and providing check-cashing services – no gambling with deposits allowed. The US Post Office can safely and efficiently provide the infrastructure for such a banking network, as it did from 1911 until 1967. The post office is ubiquitous, with branches in every town and community.

A Proven Model

Postal banking systems are also ubiquitous in other countries, where their long record of safe and profitable public banking has proved the viability of the model. The mother of all postal banks was in Great Britain in the 19th century. The leader today is Japan Post Bank (JPB), now the largest depository bank in the world. Not only is it a convenient place for Japanese citizens to save their money, but the government has succeeded in drawing on JPB’s massive deposit base to fund a major portion of the federal budget. Rather than using its deposits to back commercial loans as most banks do, Japan Post invests them in government securities. That means the government is borrowing from its own bank and its own people rather than from foreign bondholders.

That is the basic idea behind the national postal savings and infrastructure bank. The deposits of the nation’s savers can be invested in government securities that are in turn used for rebuilding the nation. It is a win-win-win, providing a way to save the post office while at the same time protecting our deposits and rebuilding our decaying roads and bridges without dipping into taxes. It is also a way to vote with our feet, moving our money out of an increasingly risky and rapacious Wall Street into a network of publicly-owned banks that serves rather than exploits us.

Another Option: Rescind the Prefunding Requirement

Another alternative for putting the USPS in the black, of course, is simply to rescind the healthcare pre-funding requirement that put it in the red. The mandate to fund healthcare 75 years into the future appears so unreasonable as to raise suspicions that the nation’s largest publicly-owned industry has been intentionally targeted for takedown. Why? Is it because competitors want the business, or because private developers want the valuable postal properties that are being systematically sold off to meet its now-crippled the budget?

In a revealing exposé in the September 18th East Bay Express, Peter Byrne provides evidence that C.B. Richard Ellis (CBRE), the company holding the exclusive contract to negotiate sales for the $85 billion postal real estate portfolio, has sold off 52 postal properties for at least $79 million less than their fair market value. Worse, the buyers included its own business partners and shareholders, including Goldman Sachs. CBRE is chaired by Richard C. Blum, the husband of US Senator Dianne Feinstein, a family Byrne says has a history of accessing public pension funds to make private investments (citing here and here).

The post office has been made to look inefficient and obsolete, as if public enterprises are incapable of generating public revenues; yet the postal service has been both self-funding and profitable for over two centuries. If we refuse to allow our government to make money through public enterprises, we will be destined to bear the burden of supporting government with our taxes, while we watch countries such as China, Korea and Japan, which do allow public industries, enjoy the fruits of that profitable and efficient arrangement.


Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200-plus blog articles are at EllenBrown.com.

46 Responses

  1. We used to have a post office bank in Canada when I was young before the government handed the responsibility to private banks to service government debt and charge interest on it. .

  2. Since the big banks are vigorously fighting Credit Unions, I can just imagine their reaction to enlarging the scope of Post Office Banking. Let’s gear-up for a good fight!

  3. I believe New Zealand turned their Post Office business into a new bank some years ago, and it has been a winner for them. No reason why it couldn’t work in America, if a country with 5 million people can do it, a country with 300 million should do so too.

  4. […] Ellen Brown Web of Debt […]

  5. Thanks, Ellen. We have it up

    What We Could Do with a Postal Savings Bank

    Ellen Brown: Postal banking systems are ubiquitous in other countries, where their long record of safe and profitable public banking has proved the viability of the model.

    http://www.laprogressive.com/?p=80978   Dick Price LA Progressive Hollywood Progressive

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  6. Isn’t the post office already privatized? Not a government entity? Might this just be another fund to steal? I like the basic idea though.

  7. […] Ellen Brown Writer, Dandelion Salad The Web of Debt Blog September 23, […]

  8. I suggested this to my congresscritters a couple of years ago. There are already postal money orders, so the seeds of a deposit-only bank are already there.

    As far as email goes, if we connected every post office with a fiber backbone and expanded the role of the USPS include ISP services, we could bring high-speed internet to even the most rural areas. Since the physical plant infrastructure (the post offices themselves) already exists, this is likely the cheapest way to do it. It could increase revenue for the USPS and lower costs for customers. And it fits in perfectly with the postal service’s mission.

  9. […] Brown The Web of Debt Blog Dandelion Salad September 23, […]

  10. […] The U.S. Postal Service (USPS) is the nation’s second largest civilian employer after WalMart. Although successfully self-funded throughout its long history, it is currently struggling to stay afloat. …read more […]

  11. Nice idea Ellen, as it has existed before. However, taxpayers never have to be on the hook in a nation issues its own sovereign currency.

    “If there is significant idle labor (and capital) the opportunity cost of using those idle resources is next to zero. Maybe, a person who works will eat a bit extra than an unemployed person – so a small extra real cost involved.

    But the nominal spending the government would use to deploy these idle resources is not a cost at all. In those cases there would be no need for extra taxation.

    Further, spending on capital works in these instances could easily be realized without a cent of debt being issued or any tax hikes.

    Not a cent is required to allow a sovereign government to spend whatever it likes subject to goods and services being available for sale. This is not the same thing as saying the government can always build infrastructure without concern for other dimensions in the aggregate economy.

    As noted, if the economy was at full capacity and the government tried to undertake a major nation building exercise then it might hit inflationary problems – it would have to compete at market prices for resources and bid them away from their existing uses.

    In those circumstances, the government may – if it thought it was politically reasonable to build the infrastructure – quell demand for those resources elsewhere – that is, create some unemployment. How? By increasing taxes. But the higher tax rate would not be about raising funds for the spending.”

    More info@ http://bilbo.economicoutlook.net/blog/

  12. What We Could Do with a Postal Savings Bank: Infrastructure that Doesn’t Cost Taxpayers a Dime
    I am so impressed with this idea I shared it on my facebook page with my not inconsiderable number of friends in labor and elected office. As a Registered Investment Advisor, I am keenly interested in the US economy and solutions to advance economic equality and equitable economic growth. I shared it with commentary on my business website
    http://jimhannleyllc.com/a-postal-savings-bank/ and I have posted it on the google groups page for Progressive Democrats of America. There I requested it be made an agenda item for PDA’s Economic and Social Justice Issue Organizing Team.
    The door is open to re-creating a bank for millions of the unbanked and asafe alternative to the Wall St. bank speculators through the Sanders/DeFazio bills. Ellen did a fantastic job of showing the need and multiple beneficiaries of such a public bank. I am looking forward to seeing more discussion on this proposal. Thank you.

  13. Why not start with State Banks? North Dakota has one, why not Maryland? Can a State contract with the Post Offices for services?

  14. How innocent many of these articles are. Solid, great ideas… But GOSH! we never seem to have them presented as a bill let alone voted into law. The Blow-flies in D.C., when not kneeling before their AIPAC masters, will only make into law that which guarantees them continued monetary support. They don’t give a damn about us, our country or our welfare. Hell, “patriot” isn’t even in their lexicon. the sooner more of us wake up to that fact, the sooner we can begin our patriotic DUTY and clean house.

  15. […] Ellen Brown is author of From Austerity to Prosperity: The Public Bank Solution. At The Web of Debt Blog, she writes What We Could Do with a Postal Savings Bank: Infrastructure th&#97…: […]

  16. […] What We Could Do with a Postal Savings Bank: Infrastructure that Doesn’t Cost Taxpayers a Dime | W… […]

  17. Entrust the Postal Service with my money? LMAO. You’re only feeding the beast.
    I have an MBA in finance and I worked at US Postal Headquarters in Washington for six months. I still have nightmares — I’ll leave it at that.
    I’m sorry, but you’re dreaming, lady.

    • “Leaving it at that” is not constructive criticism. The US postal bank worked well from for the 50+ years of its existence and there’s no reason to think that it couldn’t again. Postal banks work well in other countries. In case you hadn’t noticed, private “TBTF” banking was the worst of nightmares in 2008 and continues to be one, expected to crash again at any time taking our savings and the economy with it. I’d trust a salaried civil servant over crooks like Lloyd Blankfein or Jamie Dimon with my money any day. As for your having an MBA, so what? So you’ve been indoctrinated.

  18. We dont need sat mail delivery any way. Same old denacart thinking, i would wonder who put the resrictions on the post office in the first ,and maybe the unions and the pensions should be replaced with a 401 k and an at will policy.

  19. Hi!, Patrons Of Ellen Brown Et Al:

    Didn’t the early beginings of the US postal Service known as the Pony Express involve banking services/practices? Somehow we are made to believe that things must change, in order to modernize but when the old methods work best aren’t they best left as is? At work we use to tell each other: “If it ain’t broke don’t fix it!” For sure we will have modernizations arranging our electronic world but Wall Streeet has turned into a maze of cunning crooks robering everyone; along with the TROJAN HORSE, fiat Federal Reserve System sense its’ stealth inception back in 1913. Ellen has come up with ideas relevant to possibly circumventing both the above mentioned problems but what needs to happen to implement her ideas into OUR everyday lives NOW making we the people the masters of OUR own banking practices devoid of Wall Street tactics that rob and gut all of us monetarily speaking? We do not need additional monetary duress built into OUR psyches/lives for monitoring daily added to what we already deal with daily do we? Enough is enough and OUR common awareness of what Ellen points out to US has made us ready for her proposals or not? We need to put her ideas into action and not just remember she wrote US appaling to our good common sense but left it at that without taking appropriate actions to put her ideas into operation within OUR economic system ASAP? After all she has written to advise US in good faith that we the people will take her message to heart and translate it into actions culminating in OUR Postal Service Offices becoming local, community banking centers of we the people. We the people need her ieas at work in OUR behalf ASAP don’t we? Should we begin with peititions to OUR Senators both State & Federal or where to we begin? Who can best help US organize, in order to put her ideas in place? Let’s not just sit on this folks!!

    RUSS SMITH, CA. (One Of Our Broke Fiat Money States)

    • Wells Fargo started as a Wagon transport service in the 1800’s didn’t it? It seems to have made the transition to modern day Banking quite succesfully. I understand New Zealanders flocked to the Post Office Bank when it converted to a Bank, in protest to Australia’s “Big 4” Banks taking their banks over in the ’80’s (I think).
      The people of the USA will jump at the chance of “sticking it” to the established Banks, if my guess is any good. Good Luck.

  20. This is what America needs. It never made sense that the Post Office was losing money.

  21. […] This piece first appeared at Web of Debt. […]

  22. Hi Ellen,
    The solutions offered by public banks and the Post Office in particular are appropriate solutions to the current devastation provided by private central banking except for two unrecognized issues:
    1) All institutions today allow their leadership to be taken over by those driven by service to self (‘jerks’ is a technical term for sociopathy and worse).
    2) As Dr. Albert Bartlett has shown, unconstrained exponential growth is impossible in a finite system!
    There is no natural entity that can double in size more than about twenty times. Our major institutions, monarchies, banks, corporations, etc., now seem to be seeking to violate that limit. When one entity dominates any space there is nothing left for anything else. This domination by these large human institutions will also cease. We do not seem to be able to recognize that something can be alive for a long time but can not also grow. A large redwood tree may be many hundreds of years old but it is not growing in size at a financially meaningful rate.

    The combination of these two issues will render even the best solution inoperable in a relatively short time. We need to incorporate these realities into any proposal.

  23. Ellen knows so much about private? public? banking and its such a difficult subject I hesitate to comment because I fear I probably don’t understand her position. Big Bank Federal Reserve debt based Rothschild types privately owned banking has screwed the US royally and will have to be stopped one way or another. What I want to say is I believe individuals should own individual banks. If the postal banks could be mixed with individuals or individual corporations owning individual post office banks this strikes me as free enterprise. What I don’t want is bigger government owning a bigger segment of the economy via postal banks. The US Treasury needs to issue and back the US currency and not have an entity like the privately owned Fed taking its take. Individual corporations owned by individuals operating individual locations for a profit strike me as good. The idea of individuals working hard owning their own businesses and possibly getting rich in the process strikes me as what made the US great. Monopolies whether private like the Fed or public like government strike me as bad for the Peeps. Guess I dislike anything collective.

  24. Randy,
    You are an individual who has or is now (apparently) part of a group that has set up this group institution called the post office in the US. Thus you own it. Any bank owned by an individual who is not within the community it serves takes resources from the community for use elsewhere this is a description of a “mine”. Warren Buffet is a successful individual and a “good” man but he is successful because he moves resources from one area to another for his own benefit.You need to think ababout this issue.
    The Federal Reserve System was set up with this reality fully understood, but the Banking Act of 1935 dismantled the safeguard against “mining” US Treasury Bonds by placing a private bond trading group between the Treasury and the FED. The FED repatriates 90% of its interest collections to the Treasury, but Warren Buffet as an individual owning Tbills does not nor do you if you own them. Since you own the Post Office any interest it collects is already yours. You only have to see that it is managed well. You must trust regulators to have any hope of controlling a privately held bank. Ask Brooksley Born about what it takes to oppose those bent on fraud!

    • The world, as a whole knows how beautifully the Central banks, (FED RES in ameriKa), has worked out for mankind.


      • Have you any thoughts about how to arrest sociopaths without a revolution? Randy seemsvto trust driven individuals more than a system set up for group participation. Of course if we are not smart enough to demand that only real persons should be able to influence policy then all is already lost and we are in a police state because we like it that way.

        • “…then all is already lost..” Exactly. The things we are seeing now are what extinct nations are made of. Denizens unable, (or unwilling), to think critically or objectively, a corrupted government regardless of which way you look. Gangsters as “police” trained in a foreign country dubbed a terrorist nation by the U.N., (Israel), across the board, blatant acts of treason rife in the executive, legislative and judicial branches of this dying republic. I believe it was Ben Franklin who stated, (in part), a people willing to give up their rights/liberties for security deserve NONE of the three. We worship the demons and vilify the angels here in what has become “bizarro world”, we have allowed a polluted government to terrorize the world and now our chickens are coming home to roost and rightly so….Karma is in fact a bitch.

    • I would assume you think Obamcare is good for the country. If I’m wrong and you think Obamcare is not good for the country please let me know and I’ll reply to your comments.

  25. In the end the Affordable Health Care Act is a tragedy. Not because individuals should not have health care but because this banker owned politician felt he had to make peace with private insurance companies instead of offering a single payer system from the get go. If the State exchanges work the way I hope they will eventually become to inexpensive for the overhead heavy insurance system to compete with, but we can screw this up with the help of those who benefit most from our discomfort and myopia.

  26. […] banking advocate Ellen Brown has also called for a postal savings bank, pointing out that, like the postal service itself, such a bank […]

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