Your local post office used to be a bank -- until 1968. That's when Canada Post got out of the banking business. But, Linda McQuaig writes, there are good reasons for restoring banking services to Canada Post's mandate:
As they’ve turned their attention to catering to the wealthy, Canada’s six big banks have shut down more than 1,700 branches across the country in recent years. In many rural communities today, you’re no more likely to see a bank than a buffalo.This has left hundreds of thousands of Canadians without bank accounts, including many low-income city dwellers – notably young people with poor credit ratings and lack of identification – who now rely on pay-day loan companies charging annualized interest rates well above 300 per cent.
As email cut into its profits, the executives at Canada Post suggested to the Harper government that getting back into banking could solve Canada Post's woes:
But if the idea seemed like a sure winner, it ran into a major roadblock – the fierce ideological objections of Stephen Harper’s Conservative cabinet. After all, postal banking would be public banking, and the Harperites were hell-bent on shrinking government, not expanding it.So instead of opting for a win-win strategy, the Harper cabinet came up with a lose-lose strategy for the post office: dramatic increases in the cost of postage stamps and the elimination of home delivery.
But the proposal is back on the table. And it offers distinct advantages -- not just to the post office, but to all Canadians:
A postal banking system could even inject some competition into Canada’s highly concentrated banking sector, one of the least competitive in the world. According to a 2014 IMF report, Canada is among a handful of countries where the three largest banks control as much as 60 per cent of banking assets.This uncompetitive situation has left Canadian bank customers – even those lucky enough to locate a branch – facing some of the world’s highest banking fees.If postal offices throughout the country offered a range of banking services – savings accounts, low-fee chequing accounts, low-interest credit cards, small business loans – the big banks might be forced to compete, novel as that sounds.
The CEO's of the five major banks will howl. After all, "even in last year’s sluggish economy, they collectively enjoyed $35 billion in profits – about $4 million per hour per day – with bank CEOs among Canada’s top-paid executives."
But who should the banks serve?