Talking Points

The conservative case for postal banking

Last month, the U.S. Postal Service began offering check-cashing services at locations in metro Washington, Baltimore, and the Bronx. Although it's just a pilot in a few markets, the program is a baby step toward the reestablishment of postal banking, which USPS discontinued in 1967.

Progressives have long seen postal banking as a way to bring millions of people without bank accounts into the regular financial system. Because they have bad credit, trouble maintaining a minimum balance, or lack a fixed address, these customers rely on non-bank establishments like check-cashing stores and payday lenders. Due to their high fees and interest rates, such operations were targeted for regulation when the Consumer Financial Protection Bureau was established in 2011. 

Conservatives and libertarians have mostly rejected that effort, including proposals for a public alternative. The arguments invoke classic small-government themes: Offering banking services through the postal service would be expensive, unnecessary, and compete unfairly with private enterprise. There's also good reason to doubt that the Postal Service has the capacity to administer complicated products such as loans. It can barely deliver the mail in some of the same markets designated for the new program. 

For the last few years, though, the right has been engaged in a broad reconsideration of the scope of government. As populists challenge traditional opposition to tariffs and industrial policy, they might also consider whether a limited version of postal banking makes sense in the 21st century. For all its shortcomings, the USPS has an advantage private financial institutions lack: As a branch of the national government, its banking activities would likely be subject to the First Amendment.    

First Amendment protection means customers of a postal bank could not have their accounts closed or transactions refused because they were associated with controversial political activity. Particularly if it included an online payment option, postal banking could make provide a refuge for conservatives or other dissenters who fear the emergence of an de facto social credit system. Private payment processors, by contrast, have been cracking down on the use of their platforms for constitutionally protected if unappealing purposes. 

Writing in The New York Times, James Poulos recently defended Bitcoin and other cryptocurrencies as a means of protecting citizens' private financial affairs from public influence. Paradoxically, banking with the state itself would have the same effect. Unlike accounts on PayPal, the Constitution can't be canceled.