5 ms·

Maybe a dumb question, but why is the government getting into banking? Is this desirable? IMHO most consumer facing services they roll out are pretty poor. And

Maybe a dumb question, but why is the government getting into banking? Is this desirable? IMHO most consumer facing services they roll out are pretty poor. And for what it's worth, seems like Walmart and other companies already offer a service like this -- and for a lower price! See: https://www.walmart.com/cp/check-cashing/632047 https://www.walmart.com/cp/check-cashing/632047

temp8964 5y ago
> Maybe a dumb question, but why is the government getting into banking? I think all you need to do is considering banking as a basic human right, which can include everything. In addition, you can use race / gender / xx difference to make it an inequality issue, which again can include everything.
helloguillecl 5y ago
It's not a bad idea in some cases: For example in Chile checking accounts were quite difficult to get for the poor until the state's bank [1] started issuing a bank account to anyone who requested it at $0 fixed cost, at a loss. This bank also: - Gives mortgages to sectors of the population in which banks are not interested. - Partners with small shops to offer financial transactions in low-income or very remote areas [2] or where opening a branch does not make economic sense. The social benefits are big and out-weight the costs/risks that would not have been taken by a private party. The bank even has healthy profits of around 350 MUSD per year that go back to the chilean state. Considering that access to financial services is fundamental to participate in the economy, I find it to be an excellent government goal. In this case it looks more to me a bit similar to the Deutsche Post's Postbank in Germany, that leverages their Post offices to offer financial services. [1] https://www.bancoestado.cl/ https://www.bancoestado.cl/ [2] https://goo.gl/maps/R22eAJd8B3LKnz8s7 https://goo.gl/maps/R22eAJd8B3LKnz8s7
- sofixa 5y ago
  Same in France with the Banque Postale arm of La Poste - you have bank branches in most post offices, so it's got great national coverage, fees are low, etc.
xyzzy123 5y ago
One reason many postal services are interested in this is that they tend to have a very wide physical footprint in a time where banks are increasingly closing branches. In many countries post offices act as a generalised "service provider" where third parties can contract to have in-person transactions done. Often they are processing various transactions for existing banks anyway. I'm not in the U.S. but yes I expect that Walmart would be a direct competitor in providing these sorts of services.
cowsandmilk 5y ago
Why does it matter that Walmart offers it at a lower price? No one is forcing you to go to USPS. All that suggests is that USPS set the service at a price where it should be profitable. Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store. It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. I don’t get up in arms over price differences between target and Walmart, why should I between USPS and Walmart?
- lpolovets 5y ago
  > No one is forcing you to go to USPS. First, the government does force you to use USPS for some things. The USPS has a monopoly on the delivery of certain types of mail. Second, we all pay for USPS as taxpayers regardless of whether we use its ancillary services. Well, we won't pay if check cashing is a profitable program, but we will if it's not -- and I'm skeptical that it will be profitable given you have fraud costs, training costs, etc. > Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store. To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers. IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here. > It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. Zero qualms about other companies offering new services. If they work well, those companies will succeed, and if not, they will fail. And success is based on making customers happier than competitors do. That's not the case with government services. If they work well, great, and if not, everyone subsidizes them. For example if a startup launches check cashing and loses $10m because of fraud, they go under. If the USPS ends up losing $1b due to check fraud next year, I'm guessing they'll just ask for $1b more in funding the following year. And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.
JanisL 5y ago
Commercial banking has been steadily declining for quite some time, it's a long term trend that this is just continuing: https://fred.stlouisfed.org/series/USNUM https://fred.stlouisfed.org/series/USNUM
hoppyhoppy2 5y ago
There are many neighborhoods across the US that do not have a Walmart but do have a bunch of predatory check-cashing businesses and a post office. There are ~ 5,000 Walmart locations in the US vs. more than 30,000 retail Post Office locations.
hellbannedguy 5y ago
Banks have failed the poor first too long. 1. There are people who can't get a bank account. (There is no federal law that guarantees a bank account.) 2. These people have to rely on Payday rip-off services. (Why give a bank money to cash a federal/state/local check?) 3. The fees that banks are charging are deleterious to the poor. My bank charges $15/month for under $1500.00. (I'm going to close my account in a few months. Why give them $170 a year? I'll use cash, or MO. 4. It's about time government steps in.
crispyambulance 5y ago
> Maybe a dumb question... Yes, you're right, it is a "dumb question". The USPS is not "the government". It has certain government mandates, and postal workers are classed as federal employees but to just call it "the government" is not quite right. They're facing financial difficulties because of pensions and health care plans from another (more civilized) era and not because of bad service. I don't know if banking is going to work out for the USPS. It makes sense that it's a "pilot program". If it puts slimy check-cashing and payday-loan joints out of business, that would certainly be a good thing. The idea of the USPS becoming a third party identity service provider has been tossed around before, and they could certainly provide other miscellaneous bureaucratic services. Whatever happens USPS will need to make deep changes, I think, in order to survive.
- toast0 5y ago
  How is the USPS not "the government"? Unless we're playing British English games where "the government" means the party in control of Parliment and there's some other word for things the State does. The USPS exists to serve a constitutional mandate, has its operations overseen by Congress, and 9 out of 11 board seats are appointed by the president. It is a government agency. Or you can read the establishment law, which states it's an establishment of the Executive branch https://www.law.cornell.edu/uscode/text/39/201 https://www.law.cornell.edu/uscode/text/39/201
JTbane 5y ago
>Why is the government getting into banking? Because you shouldn't have to pay $2 or whatever to get every paycheck you have cashed. Banks often have minimums in the hundreds to thousands of dollars for checking accounts.
WA9ACE 5y ago
It doesn't seem to be mentioned anywhere else so I'd like to bring up that the USPS used to offer a sort of banking service before from 1911 to 1967. https://en.wikipedia.org/wiki/United_States_Postal_Savings_System https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...
snarf21 5y ago
Except in the biggest of cities, Walmarts tend to be outside the downtown and poorer areas that need this service. Those areas do have walkable post offices. Some people don't understand how expensive it is to be poor. In lots of this country, the best shopping option people have is a dollar store.

temp8964 5y ago

> Maybe a dumb question, but why is the government getting into banking? I think all you need to do is considering banking as a basic human right, which can include everything. In addition, you can use race / gender / xx difference to make it an inequality issue, which again can include everything.

helloguillecl 5y ago

It's not a bad idea in some cases: For example in Chile checking accounts were quite difficult to get for the poor until the state's bank [1] started issuing a bank account to anyone who requested it at $0 fixed cost, at a loss. This bank also: - Gives mortgages to sectors of the population in which banks are not interested. - Partners with small shops to offer financial transactions in low-income or very remote areas [2] or where opening a branch does not make economic sense. The social benefits are big and out-weight the costs/risks that would not have been taken by a private party. The bank even has healthy profits of around 350 MUSD per year that go back to the chilean state. Considering that access to financial services is fundamental to participate in the economy, I find it to be an excellent government goal. In this case it looks more to me a bit similar to the Deutsche Post's Postbank in Germany, that leverages their Post offices to offer financial services. [1] https://www.bancoestado.cl/ https://www.bancoestado.cl/ [2] https://goo.gl/maps/R22eAJd8B3LKnz8s7 https://goo.gl/maps/R22eAJd8B3LKnz8s7

sofixa 5y ago
Same in France with the Banque Postale arm of La Poste - you have bank branches in most post offices, so it's got great national coverage, fees are low, etc.

xyzzy123 5y ago

One reason many postal services are interested in this is that they tend to have a very wide physical footprint in a time where banks are increasingly closing branches. In many countries post offices act as a generalised "service provider" where third parties can contract to have in-person transactions done. Often they are processing various transactions for existing banks anyway. I'm not in the U.S. but yes I expect that Walmart would be a direct competitor in providing these sorts of services.

cowsandmilk 5y ago

Why does it matter that Walmart offers it at a lower price? No one is forcing you to go to USPS. All that suggests is that USPS set the service at a price where it should be profitable. Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store. It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. I don’t get up in arms over price differences between target and Walmart, why should I between USPS and Walmart?

lpolovets 5y ago
> No one is forcing you to go to USPS. First, the government does force you to use USPS for some things. The USPS has a monopoly on the delivery of certain types of mail. Second, we all pay for USPS as taxpayers regardless of whether we use its ancillary services. Well, we won't pay if check cashing is a profitable program, but we will if it's not -- and I'm skeptical that it will be profitable given you have fraud costs, training costs, etc. > Walmart may subsidize the service assuming you’ll spend money in store and they’ll get several more dollars out of the transaction. Even less expensive, grocery stores have long done cash checking for free when you check out at the store. To me these are both reasons for the government not to get into this business. If Walmart offers a lower price, whether that's a loss leader or not, it's great for consumers. IMHO govt services make sense when private industry can't provide them effectively. That doesn't seem like the case here. > It is hard for me to be upset about a new service that is less expensive than the set of companies gouging people, but has some competitors that are cheaper. Zero qualms about other companies offering new services. If they work well, those companies will succeed, and if not, they will fail. And success is based on making customers happier than competitors do. That's not the case with government services. If they work well, great, and if not, everyone subsidizes them. For example if a startup launches check cashing and loses $10m because of fraud, they go under. If the USPS ends up losing $1b due to check fraud next year, I'm guessing they'll just ask for $1b more in funding the following year. And if check cashing seems like a good direction, should the government develop its own reward credit cards? Buy now, pay later? Crypto exchanges? Etc.

JanisL 5y ago

Commercial banking has been steadily declining for quite some time, it's a long term trend that this is just continuing: https://fred.stlouisfed.org/series/USNUM https://fred.stlouisfed.org/series/USNUM

hoppyhoppy2 5y ago

There are many neighborhoods across the US that do not have a Walmart but do have a bunch of predatory check-cashing businesses and a post office. There are ~ 5,000 Walmart locations in the US vs. more than 30,000 retail Post Office locations.

hellbannedguy 5y ago

Banks have failed the poor first too long. 1. There are people who can't get a bank account. (There is no federal law that guarantees a bank account.) 2. These people have to rely on Payday rip-off services. (Why give a bank money to cash a federal/state/local check?) 3. The fees that banks are charging are deleterious to the poor. My bank charges $15/month for under $1500.00. (I'm going to close my account in a few months. Why give them $170 a year? I'll use cash, or MO. 4. It's about time government steps in.

crispyambulance 5y ago

> Maybe a dumb question... Yes, you're right, it is a "dumb question". The USPS is not "the government". It has certain government mandates, and postal workers are classed as federal employees but to just call it "the government" is not quite right. They're facing financial difficulties because of pensions and health care plans from another (more civilized) era and not because of bad service. I don't know if banking is going to work out for the USPS. It makes sense that it's a "pilot program". If it puts slimy check-cashing and payday-loan joints out of business, that would certainly be a good thing. The idea of the USPS becoming a third party identity service provider has been tossed around before, and they could certainly provide other miscellaneous bureaucratic services. Whatever happens USPS will need to make deep changes, I think, in order to survive.

toast0 5y ago
How is the USPS not "the government"? Unless we're playing British English games where "the government" means the party in control of Parliment and there's some other word for things the State does. The USPS exists to serve a constitutional mandate, has its operations overseen by Congress, and 9 out of 11 board seats are appointed by the president. It is a government agency. Or you can read the establishment law, which states it's an establishment of the Executive branch https://www.law.cornell.edu/uscode/text/39/201 https://www.law.cornell.edu/uscode/text/39/201

JTbane 5y ago

>Why is the government getting into banking? Because you shouldn't have to pay $2 or whatever to get every paycheck you have cashed. Banks often have minimums in the hundreds to thousands of dollars for checking accounts.

WA9ACE 5y ago

It doesn't seem to be mentioned anywhere else so I'd like to bring up that the USPS used to offer a sort of banking service before from 1911 to 1967. https://en.wikipedia.org/wiki/United_States_Postal_Savings_System https://en.wikipedia.org/wiki/United_States_Postal_Savings_S...

snarf21 5y ago

Except in the biggest of cities, Walmarts tend to be outside the downtown and poorer areas that need this service. Those areas do have walkable post offices. Some people don't understand how expensive it is to be poor. In lots of this country, the best shopping option people have is a dollar store.