[omginternets]

Why does a public service need to be competitive with private banks? I think much of the point is to collectively pay for a safety-net service. That service is: minimal banking functionality for all citizens, so that they can contribute to society.

(Edited for tone. Sorry about that!)

[Kalium]

It cost money to run and the customer base pulled its funds in favor of better choices.

The goal of a postal bank is often framed in terms of a source of revenue for the USPS. Examples include in this very thread. If there's no expectation of net-positive revenue, then there needs to be a different justification for why the post office should spend money to offer everyone banking service inevitably inferior to the private sector. Plus, now you have all the politics that come with a subsidized service and paying for it. If it can pay for itself, it's much simpler.

Postal banking is often advanced as an idea for a public service that will eat Wall Street's lunch to the benefit of all. We should be at least a bit skeptical of the unvarnished optimism of that. Further, I think that if we're going to seriously discuss the topic we need to grapple seriously with why the US doesn't have one anymore.

[omginternets]

>It cost money to run and the customer base pulled its funds in favor of better choices.

Again, you're presenting things in commercial terms, but this was never meant to be a commercial enterprise.

>Postal banking is often advanced as an idea for a public service that will eat Wall Street's lunch to the benefit of all.

That is a silly idea, but it seems you're ignoring the good idea. Again, this idea is: pay for a service that ensures Americans always have minimum viable banking. Upshots include: poor people can participate in the economy and in some cases, pull themselves out of poverty.

[Kalium]

I don't know if you're aware of this, but the United States Postal Service is self-funding. My understanding is that they are required to be. They do not receive a yearly budget from Congress.

This means questions like "How will this be paid for?" are not idle distractions to derail good ideas with impossible perfection. They are key obstacles to be overcome. To have USPS run a bank as a non-self-funding public service would mean they would have to go to Congress to raise prices to subsidize it. This is always a political process, and I imagine the cost of things like stamps falls more on the poor than on the rich.

Alternatively, you could find a way to rework the entire legal and financial infrastructure of the USPS so that it does run on direct federal funding. This is, to put it mildly, a lot of work.

Whether or not it's a good idea depends in no small part on what your precise goals are and how you expect to achieve them. If your goal is for poor people to have access to basic banking services, then the Bank On program and local credit unions might be better options for many people. If your goal is for poor people to have access to credit, then a postal bank is probably not a good choice unless you want lots of poor people having their credit wrecked by a public service.

Generally the idea is to have a public bank with the postal system being a convenient vehicle for that, rather than some deep and fundamental ties between post offices and banks in the modern world. The postal service in the US might not be as ideal a vehicle as it is in some other places.

In summary, a postal bank that can pay for itself is far more likely to get set up and deployed widely. This is an important point because of how USPS is regulated.