PHOTOS: The little Post Office in downtown St. Albert, where your blogger lives, which Canada Post is anxious to close as soon as possible. Below: The U.S. Post Office in Fallon, Montana, the Canadian Post Office in Dewberry, Alberta (villageofdewberry.ca), American social activist Ralph Nader, and Service Alberta Minister Stephanie McLean.
We now live in the 21st Century, a digital age, and it’s time to recognize access to fairly priced banking service as a human right.
A decent life, after all, is all but impossible without a bank account. Access to banking services has rightly been called a passport to the modern economy.
Social activists recognize the first steps to getting our most vulnerable citizens off the streets and into a productive and healthy life include helping them to open a bank account.
So while the Alberta NDP Government’s legislative crackdown on the predatory payday loan industry is a useful step in the right direction, it only really tackles a small part of much bigger problem when it imposes caps on borrowing fees and requires exploitive lenders to provide customers with an honest accounting of the true cost of their usurious loans.
Bill 15, An Act to End Predatory Lending, introduced by Service Alberta Minister Stephanie McLean and given first reading on May 12, also includes some modest measures through an Alberta credit union to provide lower-cost alternatives to extortionate payday loans.
It would appear, by the way, this policy is popular with almost everybody in Alberta except the payday loan industry and its allies in the media and the ideological right. Only 17 per cent of the respondents to a recent public opinion survey thought payday loan companies should be permitted to continue operating as they do now, although the industry itself and its touts in mainstream media have whined about their activities being characterized as predatory in the title of the bill.
As an aside, I think we can safely predict that the parties of the right will be cautious about revealing too much about the promises they are doubtless making to the predatory loan industry regarding future legislation. If those changes are ever made, you can count on it they will be promoted under the cover of “choice,” or even “freedom.”
But Bill 15 hardly solves the problem of a banking industry that is not particularly interested in providing services to low income customers – and, indeed, may discreetly have its fingers in exploitive-loan and “alternative financial services” operations, the better to squeeze customers who don’t have economic clout or substantial assets.
Last year, U.S. consumer and social activist Ralph Nader wrote that such fringe banks bring in about $40 billion a year in high-interest loans in the United States.
Where, he wondered, are the conventional banks? “They are increasingly closing up shop in low-income areas,” Mr. Nader said, quoting the Bloomberg financial news service. “From 2008 to 2013: ‘Banks have shut 1,826 branches…. and 93 per cent of closings were in postal codes where the household income is below the national median.’ If you are living in a low-income neighborhood, just finding a bank is difficult.”
Don’t imagine for an instant that these trends are not the same in Canada.
The result in the United States, according to Mr. Nader, is that “the unbanked now pay up to 10 per cent of their income just to use the money they have already earned.”
The impact in Canada, says the Canadian Union of Postal Workers, is that “Canadian banks have raked in enormous profits while cutting service, closing branches and charging some of the highest banking and ATM fees in the world. We deserve better.”
Both the well-known American activist and Canada’s postal workers advocate the same sensible solution: the creation of a national postal banking system to serve all citizens, but especially those the commercial banking sector either rejects outright or directs into exploitive and predatory alternative-banking rackets.
The United States Postal Service, wrote Mr. Nader, “could expand to include paycheque cashing, pre-paid debit cards, bill payments, ATMs, savings accounts and small dollar loans. The introduction of these services would offer millions of Americans a local, reliable and affordable alternative to managing their finances. With over 30,000 locations, Post Office branches are everywhere in America.”
CUPW makes similar points about Canada, where we had a national postal banking system from 1868 until 1969, when the commercial banking lobby managed to get it shut down. “Nearly two million Canadians in urban and rural areas desperately need an alternative to predatory payday lenders,” CUPW says.
Where they exist – for example, in France, Switzerland, Italy and New Zealand – postal banks are highly profitable while filling a fundamental social need that “the market” is only prepared to address in an exploitive and anti-social manner.
As in the case of stronger regulation of payday loan sharks, the idea of a postal bank is popular with Canadians … if you ask them. “Almost two out of every three respondents (63 per cent) to a 2013 Stratcom poll supported Canada Post expanding revenue-generating services, including financial services like bill payments, insurance and banking,” CUPW notes.
Moreover, the union says, Canada Post conducted a four-year study on postal banking that indicated a postal bank “would be a win-win strategy” for the Crown corporation and the country. A copy of the was study was obtained though an Access to Information request, CUPW said, but 701 of its 811 pages were censored. “CUPW has asked Canada Post’s president to release the full report, but he has refused.” Why doesn’t this come as a surprise?
We can create a postal bank if we wish: Social Credit Premier William Aberhart tried something like it in Alberta in 1938 when his Social Credit government created Alberta Treasury Branches. However, through years of conservative governments under Ernest Manning, still labeled Social Credit, and then six Progressive Conservative premiers, it has been transformed for all intents and purposes into just another commercial financial institution, rebranded ATB Financial to shroud its radical beginnings.
Still, this needs to be done at the federal level.
All we need to do is recognize two things:
- That our rights to life, liberty and security of the person and to equal treatment under the law, and equal protection and benefit of the law without discrimination guaranteed to all Canadians by our Charter of Rights and Freedoms include full access to fairly priced banking services.
- That “the market” will never do this job in a way that doesn’t attempt to exploit society’s most vulnerable citizens.
It’s time for a postal bank, in Canada and the United States. As the Posties say, we deserve better.
This post also appears on Rabble.ca.
This topic has been quite thoroughly debated on iPolitics over the past six months. It has also featured on several CBC Radio shows, where they even phoned people in the UK about their Post Office banking accounts. So you’re a bit late on the topic, but welcome.
The whole question of services that are provided as a public utility by private companies is at stake. For example, there are people with little experience and no thought who advocate charging more for home letter delivery. Or the opposite. In the case where electricity supply companies supply a large area, sometimes provincewide, Public Utilities Commissions have tended to make rates that are uniform across the service area.
It is a truism that private companies always want to reduce costs, and a high population density is desirable to them simply because it requires fewer employees to cover such areas per paying customer. After that simple truth dawns on simple-minded management, any further restrictions on actual service that will provide higher profits quickly come to the fore. Hence small towns lose bank branches, or they are never modernized so as to keep costs down. Canada Post with its harper senior management can think up a hundred reasons why postal rates should reflect actual local costs, and so on.
The concept of uniform service seems to escape these intellects. Should a rural Canadian be penalized for living in the sticks because service costs are necessarily higher in low population density areas? Does Revenue Canada offer lower income tax rates to rural Canadians for the inconvenience they suffer in terms of few doctors, few bank branches, so-so mail deivery and the like? What a laugh. Of course not, except a tiny deal for folks living in the territories.
It should be blatantly clear that private businesses are in it for the dough. They need to be reminded that they should expect to face certain costs if they are given a service territory to cover, not just to sit around and dream up exceptions they can lobby for, or worse, reduce service without saying a darned thing publicly.
For that reason, the thousands of Canada Post branches across this country should indeed be into banking. The buildings are there, and instead of Deepak Chopra and his MBA minions trying to dream up ways to minimize costs, they should instead dream up ways of increasing revenues by providing services where few exist – it’s a market opportunity. Unless you’re a neoliberal or neocon or whatever these people with twisted thinking are called trying to dream up ways to concentrate profits to people who don’t need even more money, and who apparently believe that only the private sector is efficient.
The end result of such thinking is that the entire human race should live in mega-buildings so that the inconvenient costs of, you know, actually servicing these biological “units” can be reduced to almost zero, And the people living ten klicks outside of the city are on their own, baby!
It’s time to wake up and realize that there are reasons to have a province, a country, that are not dictated by corporate interests and fake notions of “efficiency”. We are either in this together or we are not, and that is a social reason for existence, not an economic one. The way things are going these days, this efficiency thinking and individuality so common among say, rural Albertans, are actually mutually incompatible, which apparently hasn’t occurred to the rabid supporters of the right.
Want to live in Nowhere, AB? Well your corporate overlords running the Right way of thinking are not going to give you any services at all, or charge you through the nose for next to nothing. Time to wake up and examine what society is actually all about and running it for the convenience of wealth aggregators is not the ultimate solution.
Bring on banking in the Post office and and send Chopra on some sociology courses to wake him up.
“They need to be reminded that they should expect to face certain costs if they are given a service territory to cover…” Actually, we used to do this with utility companies in Canada and it was a good deal for shareholders, who could expect a guaranteed return almost like a bond, and citizens, who were charged a fair rate and guaranteed appropriate service for their contributions to the utility companies’ bottom line. Then the MBAs and the neoliberals came, promising everything would be better under the market and, whaddya know, everything is worse. Their response to that? Even more market fundamentalism. The likely result? Everything will be worse still.
Great Post.
This would be a win for our country and everyone except the current banksters… Cdn big banks and predatory payday loan sharks.
There will be a lot of powerful lobbying and resistance against changing the current market but in today’s world of innovation and disruption this should find support across the country from under/poorly/ unserved Canadians and their governments. This is a clear case where more competition would reap significant win-win benefits.
Bring it on. It’s high time the big banks had some real competition. They have grown way too fat preying on hard working Canadians.
What about Tangerine and Alloy? Both provide zero fee banking for those who want it. For those who want more services, they pay more. Seems like the market has worked here and no government intervention is required.
Your comment shows a very poor understanding of Canadian banking and the role of government in this sector. Second, Tangerine is owned by Bank of Nova Scotia (one of the big five), and Ally (alloy sic) is GMAC headquartered in Detroit.
More and continued government oversight and regulations are needed in the banking sector lest the financial meltdown that the US experienced happen here in the future. It is precisely those regulations that prevented such a disaster here.
We call them bankster for a reason – do your homework.
While Canada Post banks are a good idea, we should all remember that we don’t even have to go there if we had a government with backbone that remembers that banks, due to their government protected oligopoly, are federally regulated. This means that if banks want the government to continue to protect them from international competition, they have to do what the government tells them to do which, this case, would mean maintaining branches in poor and/or isolated communities. If the bankers don’t like this, all a government has to do is threaten them with open markets and free enterprise.