Method of Administration

The Postal Service may seem like an unlikely agency to conduct such financial dealings as remittances, yet it has both a history of serving immigrants’ financial needs as well as the ability to do so once again. After an act of Congress, the Postal Service offered basic banking services through the Postal Savings System for 55 years. In 1915, immigrants held 70 percent of the bank’s deposits even though they were only 15 percent of the population. Many immigrants distrusted private banking establishments, and felt more comfortable with a public bank. Through an aggressive marketing campaign by the Postal Service to immigrant communities, those communities became natural customers (Baradaran 2014). The issue of affordable financial services is a familiar one for many Americans--more than a quarter of American households were either unbanked or underbanked in 2014, with access to affordable basic financial services beyond reach. As such, this policy change resulted in the proliferation in underserved areas of predatory payday loan lenders. The current arrangement results in nearly 90 billion dollars devoted solely to interest and fees due the usurious interest rates on loans (Office of the Inspector General 2014, pg. 1). Whether such an open and public venture today would yield a similar success story is an open question. After all, the financial sector has grown to be much larger, both in scale and complexity, since the Postal Banking System ended in the 1960s. However, a low-fee remittance service provided through the Postal Service would provide the government corporation a pilot program of sorts, to see how the dynamics of the modern financial system could combine with the structure and nature of the modern Postal Service, as well as the obvious benefit to immigrants of a more consistent and affordable remittance service.

The choice of the Postal Service rather than another government organization also comes down to its equitably-spaced network of infrastructure, allowing immigrants to easily access personnel in order to set up accounts and conduct account maintenance. Investments in new infrastructure would be minimal in comparison to establishing a brand new government corporation or running it through a public institution with a less widespread national presence. With over 31,000 post offices manned by over 500,000 career employees delivering to over 157 million addresses, the Postal Service of today seems capable of replicating the grand accessibility of the past postal banking system. Another possibility of a vehicle for a remittance service may be Immigration and Customs Enforcement, which has the advantage of being situated around immigrant populations. Yet, due to the reputation of the body, many immigrants will shy away from utilizing its service. If there isn’t buy-in, then the program will be hobbled. Regardless of who executes the policy, it must be done hand-in-hand with an extensive, multilingual marketing campaign along the lines of the Postal Service a century ago to build trust among concerned communities.

Further, the Postal Service will be able to provide remittance services less corruptly and criminally than the private sector, while also providing a source of consistency for migrant financial lives. Many banks in recent years have rolled back their remittance services, due to a government crackdown on possible avenues for criminal activity. For that reason, remittance fees have become cheaper and cheaper, yet due to the law enforcement initiatives the trend may reverse (Corkery 2014). In recent years, financial institutions have been cutting ties with money transfer services in an effort to crack down on money laundering and financial crime—a process called de-risking. In 2016 alone, 27 percent of banks worldwide reported closing relationships with remittance providing partners, presenting barriers to free entry in the industry and to the introduction of new innovative advancements (“Migration and Remittances” 2017, pg. 2, 5-6). Remittance service markets are failing—with fault for both public and private sector actors—and immigrant communities are on the hook.

Importantly, these concerns are not merely the machinations of an overzealous national security state, but due to recent bank behavior in regards to international criminal organizations’ financial dealings. This situation occurred in the case of HSBC and its “pervasively polluted” culture which lead to billions of dollars of terrorist and drug trafficker money being transferred through the bank, thus undermining the legitimacy of daily, innocent transactions (Jamieson 2012). It goes without saying that the Postal Service has not been implicated in such wide-ranging scandals as assisting terrorist groups and drug cartels. On the contrary, the worst criminal behavior associated with the Postal Service tends to involve individual workers smuggling drugs or stealing mail, only to be later prosecuted.

The benefits of a postal remittance service do not flow solely to immigrant communities either. The Postal Service’s fiscal health has been significantly hampered since 2006, when Congress imposed uniquely draconian standards for the government corporation to pre-fund it pension obligations (Ritholtz 2018). Even modest profits from a postal remittance system would help bolster its balance-books, and could introduce practices potentially useful in a future postal banking system as some have proposed. Securing safe and transparent transnational flows, saving immigrant’s wallets from private sector gouging, improving a vital institutional force, and providing an opportunity for experimentation in financial markets and transactions are desired and feasible goals for a postal remittance system.

Such a service would allow for a system of remittance regulation for the maximization of immigration’s social good while minimizing its socially disruptive and costly effects. By legislating the work of immigrants’ remittance needs from private banking to the publicly-owned Postal Service, many stakeholders are benefited. Immigrants benefit through the elimination of high fees, while the public sector benefits through the diverted revenue. Further, it produces a transparent, formal market for transactions, rather than a hodge-podge of price-gouging and informality. Through these characteristics, policy-space is created, offering a set of opportunities for improvement and efficiency. Postal remittance legislation is a sound policy offering affordability and security to immigrant communities.