Turn the Post Office Into a Bank? First Check Japan

Legislative efforts to turn the U.S. Postal Service into a bank to provide cheap financial services to low-income people and the unbanked could be beneficial, but lawmakers should look to the corruption that took place in Japan Post for lessons learned, writes Noah Smith in an opinion piece. The idea that the postal service should also make loans to compete with the often predatory payday lending industry may be sound; however, Smith warns that making high-risk consumer loans at the same rate of interest as Treasury bills “is a surefire way to lose money.” He suggests implementing strong provisions to ensure “the government doesn’t act like a loan shark when it comes time to collect” on short-term loans made to poor borrowers. Smith writes that “the bank should be kept out of business lending. There’s no need to repeat the mistakes of Japan Post.”

Bloomberg (05/10/18) Noah Smith

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