The conservative case of postal banking
Last month, the US Postal Service began offering check-cashing services at locations in the Washington, Baltimore, and Bronx subways. Although this is only a pilot project in a few markets, the program is a small step towards restoring postal banking services, which the USPS discontinued in 1967.
Progressives have long viewed postal banking as a way to bring millions of people without a bank account into the mainstream financial system. Because they have bad credit, have difficulty maintaining a minimum balance, or do not have 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, these transactions were regulated when the Consumer Financial Protection Bureau was established in 2011.
Most conservatives and libertarians have rejected this effort, including the public alternative proposals. The arguments invoke classic themes of small governments: offering banking services through the postal service would be expensive, unnecessary and unfairly compete with private enterprise. There is also good reason to doubt that the postal service has the capacity to administer complicated products such as loans. It can barely deliver mail to some of the same markets designated for the new program.
In recent years, however, the right has embarked on a sweeping re-examination of the scope of government. As populists question traditional opposition to tariffs and industrial policy, they might also question whether a limited version of postal banking makes sense in the 21st century. Despite all of its shortcomings, the USPS has one advantage that private financial institutions do not: As a branch of the national government, its banking business would likely be subject to the First Amendment.
The protection of the First Amendment means that customers of a postal bank could not have their accounts closed or their transactions refused because they were associated with controversial political activity. Particularly if it included an online payment option, the postal bank could act as a safe haven for conservatives or other dissidents who fear the emergence of a de facto social credit system. Private payment processors, on the other hand, have cracked down on the use of their platforms for constitutionally protected but unattractive purposes.
Write in The New York Times, James Poulos recently championed Bitcoin and other cryptocurrencies as a way to protect the private financial affairs of citizens from public influence. Paradoxically, banking with the state itself would have the same effect. Unlike accounts on PayPal, the Constitution cannot be revoked.