Renewed interest in an old model
Last week we linked to the widely publicized news that SENATOR KIRSTEN GILLIBRAND would be pushing legislation to reintroduce government-run commercial banking through the United States Postal Service.
In a 2014 article for the HARVARD LAW REVIEW, law professor and postal banking advocate MEHRSA BARADARAN describes the context that makes postal banking an appealing solution:
“Credit unions, S&Ls, and Morris Banks were alternatives to mainstream banks, but they were all supported and subsidized by the federal government through targeted regulation and deposit insurance protection.
Banking forms homogenized in the 1970s and 1980s, leaving little room for variation in institutional or regulatory design. Eventually, each of these institutions drifted from their initial mission of serving the poor and began to look more like commercial banks, even competing with them for ever-shrinking profit margins.
The result now is essentially two forms of banks: regulated mainstream banks that seek maximum profit for their shareholders by serving the needs of the wealthy and middle class, and unregulated fringe banks that seek maximum profits for their shareholders by serving the banking and credit needs of the poor. What is missing from the American banking landscape for the first time in almost a century is a government-sponsored bank whose main purpose is to meet the needs of the poor."