Should the U.S. provide a public option for banking?
via AP

Should the U.S. provide a public option for banking?

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Sen. Kirsten Gillibrand (D-NY) is introducing legislation that would require U.S. post offices to provide basic banking services, acting as a public option for banking. The postal banking proposal is meant to protect consumers from predatory payday loans by providing them with a public alternative. But others warn public banking isn't all it's chalked up to be, and we should leave banking to the private sector. What do you think? 💵

THE VOTES ARE IN!
#SupportPublicBanks
72.7%
#NoPublicBanks
27.3%

Sen. Kirsten Gillibrand (D-NY) is proposing legislation that would require U.S. post offices to provide basic banking services. Providing a public option for banking, Gillibrand argues, would allow everyday Americans to obtain low-cost, short-term loans without having to deal with risky payday lenders.

Turning the nation’s sprawling network of U.S. Postal Service facilities into places where working-class and low-income Americans who lack adequate access to commercial banking can obtain low-cost, short-term loans. Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have both spoken out in favor of postal banking, but Gillibrand is the first to introduce legislation mandating it.
The central goal of the bill is to replace risky financial products like payday loans, which can trap borrowers in prolonged cycles of debt, with regulated alternatives.

Ever since the financial crash of 2008, many have argued for a public alternative to commercial banking. And why not? Liberal lawmakers have pushed for a public healthcare option as an alternative to the private market, it makes complete sense that a public option should exist in the world of banking. 

Postal banking, like proposed in Gillibrand's bill, would enable low-income Americans who are "unbanked" or "underbanked" to take out small loans when they are most vulnerable, rather than having to take out payday loans that could force them to pay back as much as triple their original loan amount.

But while public banking may sound good in theory, the reality is very different. For starters, do you really want the postal service handling your banking? Anything the public sector can do, the private sector can do better. Plus, public banking isn't a revolutionary idea, it's an idea we tried years ago and it failed miserably in almost every case.

Some might point to the Bank of North Dakota, currently the only state-run and state-owned American bank. Of course that ignores that in the 1800s there were a number of state-owned U.S. banks. They all failed miserably, and at great expense to the taxpayer. They were also magnets for corruption. But that’s history. 
Currently the Bank of North Dakota is generally a well-run institution. It is also a massive subsidy to the fossil fuel industry. One need only look at its annual reports to see that the bulk of its below-market lending has been to the fossil fuel industry. It’s a case in point, illustrating that government-owned banks will tend to subsidize the powerful.

Allowing the government to get into the banking business could also lead to corruption. The goal for liberals has long been to get money out of politics, yet now they're talking about getting politics into money. 

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