An American Postbank

Over the past couple of days, this article has been brought to my attention from multiple angles. The basic idea — that the US Postal Service’s collapse and the problem of banking deserts in America’s poorer and more rural neighborhoods are two problems with a single solution — is an intriguing one. As an American emigrant customer of the Swiss post bank, it seems like a good idea, but I’m not sure the history of American and European financial services are similar enough to allow us to predict the success of the former from the latter.

First, I should say I’m not a customer of PostFinance by choice. They’re essentially the bank1 of last resort for foreigners right off the boat (both UBS and Credit Suisse had fee schedules and deposit requirements for new immigrants which I found as insulting as they were impractical). After the imperialist evil that is FATCA passed, leveraging access to American markets to expand the presumed regulatory competence of the United States Treasury Department well beyond the de jure bounds of its sovereignty, every bank in Switzerland decided that the lowest-risk course of action was to kick all their American customers to the curb. PostFinance remained true to its position as a safe harbor, though I can’t hold any financial asset more complicated than a savings account that pays negative annual interest in real terms, and most of my correspondence from them about my regrettable Americanness is written in a tone that it might as well start off “Dear Tax Evader”.

I’m being tedious about this because of difference number one between Swiss and American finserv: access to banking services is more crucial here because you simply cannot function in the formal economy without a bank account. Checks are rare enough that bank employees have to consult a manual to figure out what they are. Have a job? The first thing your employer asks for after the equivalent of an I-9 is a bank account number. To pay bills, you get an inpayment form the biller, which contains their account number as well as some invoice identifiers, which you generally use as input to a domestic wire transfer. Yes, you can pay these with cash by bringing the inpayment slip to any post office, but few enough people do this anymore that the post office has started charging for it.

This is, by the way, why Switzerland (as well as many other European countries) has a postbank: the offering of financial services came out of the infrastructure for domestic payments, which itself was built out of a desire to move money around without having to put pieces of paper in envelopes2. As the efficient movement of payments was seen as a necessary underpinning of the economy, and as Switzerland is in Europe, where “statist” isn’t even a word, much less an insult,  it was a natural choice to build this infrastructure under the state PTT3.

The advantages an American postbank would have are universal physical presence and, honestly, pressure to do it right brought on by the fact that unless they come up with some other way to be useful, they’ll be crushed to death between a Randite Congress and whatever replaces email. The USPS maybe isn’t the most valuable brand when it comes to trustworthy customer service, but they do a much better job than they get credit for, and they might even pick up quite a few customers from well inside the margins of the formal economy due to lingering damage to banks’ reputations from the collapse of 2008. The advantages they would bring to banking deserts would be access to formal financial services, displacement of predatory lenders5, and eventual integration of residents of these areas into the formal economy simply by providing an alternative whose business model isn’t “screw the customer as long and hard as possible6.”

What they’re missing is natural growth from already running a working payment infrastructure. Unlike Europe, the payment infrastructure in the formal economy in the United States is heavily tied to the consumer credit industry7. Payday loan sharks might not have much political pull at the national level — though I’d still expect at least one congresschild to apply the putative adjective “job-destroying” to a postbank and decry its impact on small business owners — but it doesn’t take much looking at the thoroughly bipartisan structure of e.g. Visa’s political contributions to realize that trying to build a public alternative to the American payment oligopoly would be one of the few things Congress could agree was A Bad Thing, perhaps even to the extent that they could manage to pass legislation against a postbank by executive order.

So, like functional private funding for health care, I’m afraid a postbank might be one of those nice things that America just can’t have.

1 Technically, PostFinance only got a banking license last year. Before this they were a pseudo-bank, with a rather complicated line between what they could and could not do, leading to such ridiculousness as their offering a savings account which they by law could not call a savings account.

2 Yes, the USPS provides postal money orders, which are by far the most efficient way to send US dollars domestically to people who don’t trust you, but this still involves literal paper-pushing.

3 The PTT has since been divested and split into Swisscom and Swiss Post, and Swiss Post has further been split into its mail-and-package, financial services, logistics, and bus4 services, but the ownership structures of all of these are such that calling these companies truly private is a bit of a stretch.

[4] Since the mail had to go everywhere, and transportation of people to and from places mail had to go was also seen as a fundamental and necessary underpinning of the economy, it was natural to move people and mail using the same vehicles. PostAuto’s yellow buses remain the backbone of the public transport network everywhere in Switzerland without a direct rail connection.

[5] This assumes that turning the USPS into a bank wouldn’t turn all their employees into, you know, bankers.

[6] There’s a slow education process here too: imagine how much less you’d trust your bank if the words LOAN SHARK were printed in big yellow letters right on the front door.

[7] Not that European banks aren’t trying: Ariane keeps getting stuff with her statements trying to convince her that it’s really okay to buy that two-franc box of gum with her credit card, which she simply shakes her head at and throws in the recycling pile.